Offset Mortgages

Introduction

An Offset Mortgage lets you use your savings to reduce the interest you pay on your mortgage, offering a smart way to make your money work harder. By linking your savings and mortgage accounts with the same provider, you can offset the balance of your savings against your mortgage debt.

How does offsetting work?

Imagine you have a £200,000 mortgage and £20,000 in savings. With an Offset Mortgage, your savings reduce the balance on which interest is charged—so you’d only pay interest on £180,000. And because mortgage interest rates are typically higher than savings rates, offsetting can be more financially beneficial than earning interest on your savings.

Your choices with an Offset Mortgage:

• Reduce your monthly repayments: Base your payments on the lower offset balance (£180,000 in this example) while keeping the original mortgage term.
• Shorten your mortgage term: Keep repayments based on the full mortgage amount (£200,000), meaning you pay off your loan faster.

Additional benefits:

• Tax efficiency: As your savings don’t earn interest, there’s no income tax to pay on that interest—leaving more in your pocket.
• Flexibility: Many providers allow you to offset savings, current accounts, and even cash ISAs against your mortgage. Withdrawals from linked accounts reduce the offset amount, so you stay in control of your money.

What else should you know?

Offset Mortgages are available at both fixed and variable rates. However, some lenders may charge a slightly higher rate than for a standard variable rate mortgage.

Is an Offset Mortgage right for you?

If you have substantial savings and want to make them work harder while giving yourself flexibility and potential tax advantages, an Offset Mortgage could be a great fit.

Let’s explore your options

At Maplestone, we’ll help you understand how an Offset Mortgage could work for your goals. Whether you’re looking to reduce your monthly payments or pay off your mortgage faster, we’ll guide you every step of the way.

Ready to learn more?

Get in touch today, and let’s see how offsetting could work for you!

Want to find the right mortgage for you? Get in touch with one of our friendly mortgage specialists – we’re here to help!