Best offset mortgage deals

What is an offset mortgage?

With an offset mortgage, your savings account is linked directly to your mortgage. Instead of earning interest on your savings, the money in your savings account is used to reduce the amount of your mortgage that interest is charged on.

Let’s say you have a mortgage of £200,000 and savings of £20,000. With an offset mortgage, you’d only pay interest on £180,000. You’re not using your savings to pay off your mortgage directly, but you are lowering your interest charges.

You can still access your savings if you need to, but the more you leave in the account, the more you save on mortgage interest. And because you’re not earning interest on your savings (you’re just avoiding mortgage interest), there’s no tax to pay on the benefit, which can be helpful for higher rate taxpayers.

Offset mortgages can be arranged on a repayment or interest-only basis, though repayment offset deals are more common.

Why choose an offset mortgage?

Offset mortgages offer a few key advantages:

• You can reduce the amount of interest you pay, which could help you clear your mortgage faster.
• You still have access to your savings if you need them.
• There’s no tax to pay on the savings offsetting your mortgage.
• They can be particularly useful if you’re self-employed, have irregular income, or want the flexibility to save while keeping your monthly payments manageable.

Some lenders will give you the choice of using your offset savings to:

• Reduce your monthly mortgage payments
• Keep payments the same and shorten your mortgage term

This flexibility can be a big help if your income varies or you want to pay off your mortgage early.

How offset mortgages work

Offset mortgages are most useful for people who have a decent amount of savings and want to make those savings work harder. If you have money sitting in a savings account earning a low interest rate, you might be better off using it to reduce your mortgage interest instead.

They can also suit families who want to help younger relatives get on the property ladder. Some lenders offer family offset mortgages, where a parent or grandparent puts their savings into an offset account to help reduce the borrower’s interest payments.

Who can get an offset mortgage?

To get an offset mortgage, you’ll need to meet your lender’s eligibility checks. They’ll want to know you can afford the repayments, even without the savings helping.

You’ll normally need to provide:

• 3–6 months of payslips
• Recent bank statements
• Your monthly outgoings
• Your credit history
• Information about your deposit or home equity

If you're self-employed, tax returns or business accounts will also be needed.

How to find the best offset mortgage deals

Offset mortgages aren’t as widely available as other types of mortgage, so it’s important to shop around. You can use our online mortgage finder to check the latest offset mortgage deals from across the market.

We work with over 90 lenders and can compare what’s out there to find a deal that matches your circumstances. Some lenders offer offset deals with fixed rates, others with variable or tracker rates, so it’s worth looking at all the options.

Our expert advisers can talk you through the pros and cons and help you understand whether this type of mortgage is right for you. If it is, we’ll support you all the way through the application process.

Making repayments on an offset mortgage

Your monthly repayments will depend on the type of offset mortgage you choose. Some deals will reduce your monthly payment based on how much you have in your savings account. Others keep your payments the same but use your savings to shorten the length of your mortgage term.

You can usually switch between these options, or add to or withdraw from your savings account, depending on your lender’s terms. But bear in mind that taking money out of your offset account will increase the amount of interest you pay on your mortgage.