Offset mortgages

How much can I save if I offset my mortgage?

The more savings you can offset against your mortgage, the more you’ll save on interest payments.

Let’s use our £200,000 mortgage example again:

If you save £6,000 in your offset savings account with a 3% interest rate over a 25-year mortgage term, you could save £4,440 over the term.

But if you save £20,000 at the same rate over the same term, you could save £14,540 in interest over the term. This works out at £580 per year.

Is it better to put down a bigger deposit instead of offsetting?

It depends on your personal circumstances. If you have a bigger deposit, you might benefit from lower interest rates on your mortgage. But once you’ve put down the deposit you won’t be able to get it back.

With an offset mortgage you have savings for the future when you’ve paid off your mortgage. But if you withdraw from your savings before then, your monthly payments could increase.

You can speak to our broker partner, Mojo Mortgages, who can help compare the best offset mortgages for you against standard mortgages with the deposit you have.

Can I pay my mortgage quicker with an offset mortgage?

Yes, you can. You could choose to overpay your mortgage either by increasing your monthly payments or with a lump sum.

But you should check with your lender before you do this, as there is normally a limit to how much you can overpay before you face early repayment charges (ERCs).

If you would prefer to have your money accessible, you could instead pay more into your savings account to reduce your monthly interest charges. The right decision for you will depend on your individual circumstances.