Notices
  • Support for Coronavirus - how we're helping our customers See more

How Buy to Let offset works

A Buy to Let Offset mortgage allows you to use your savings to reduce the amount of interest charged on your mortgage.

When you take out an Offset mortgage, a savings account is set up and attached to the mortgage arrangement.

Any money placed in the savings account is automatically deducted from the amount of the mortgage on which interest is charged, thereby reducing the amount of interest that you'll pay, or reducing your mortgage term and allowing you to pay off your mortgage faster. You won't earn any interest on the savings when they are linked to the mortgage.

With a Buy to Let Offset mortgage, other things being equal, this increases your net profit from letting (the tax charged on this higher figure will be more as a result) and the offsetting increases the overall cashflow you'll receive from letting. This may be important if you’re relying on this as part of your retirement income, for example.

Our Buy to Let Offset mortgages are only available to UK resident individuals for purchase or remortgage and not Limited Companies, corporate bodies or partnerships.

View our Buy to Let Offset mortgages available for purchase and remortgage:

Buy to Let Offset mortgages


Payment reduction or term reduction

With our Buy to Let Offset mortgage we offer two options on how you benefit from the money in the offset account;

Our payment reduction option is available for both capital and interest repayment mortgages and Interest-Only mortgages.

With this option, interest is charged on the mortgage amount, minus any money placed in the Offset savings account. The mortgage balance and remaining mortgage term will not reduce any quicker than if you were on a traditional non-offset mortgage.

In this example, the monthly repayments are reduced by £99.66.

With an Offset Saver account

Without an Offset Saver account

Mortgage amount

£200,000

£200,000

Offset amount

£40,000

£0

Mortgage rate

2.99%

2.99%

Term

25 years

25 years

Payment

£398.67

£498.33

Monthly saving

£99.66

Repaid after

25 years

25 years

 

Our term reduction option is only available if you select a capital and interest repayment mortgage.

With this option, your offset savings help you to pay your mortgage off earlier. Offsetting won’t have an impact on your monthly mortgage payments. Instead, the interest you save by offsetting your savings means you pay more of the mortgage back each month. Your mortgage balance should reduce faster, and you may be able to pay your mortgage off early.

In this example, the mortgage would be paid off after 21 years, 10 months, rather than 25 years.

With an Offset Saver account

Without an Offset Saver account

Mortgage amount

£200,000

£200,000

Offset amount

£40,000

£0

Mortgage rate

2.99%

2.99%

Term

25 years

25 years

Payment

£947.38

£947.38

Repaid after

21 years, 10 months

25 years

Overall saving

£36,309.52

The above diagrams use interest rates which are for illustrative purposes only.

Learn more about the Buy to Let Offset mortgage

Read our brochure to find out more about the benefits of our Buy to Let Offset mortgage and any questions you may have.

Any questions?

To find out more about our Buy to Let Offset mortgage options, or to check your eligibility, you can contact our friendly New Business Team.