• Homes for Ukraine - important information can be found here.

  • Savings members: Following the Bank of England’s decision to raise the Bank Rate by 0.25% to 1.25% on 16 June 2022, Windfall Bond and Tracker Savings Bond rates will increase by 0.25% from 1 July 2022.  In addition we are pleased to say that many of our variable rate accounts will also be increasing from 24 June 2022. We will be informing affected customers of their new rate via email or letter shortly. (Notice updated 20/06/2022).

    Mortgage members: Tracker mortgages will change on 25 July 2022 and we will write to customers individually with revised payment details where the new rate exceeds the minimum rate (or ‘floor’) already applying to their mortgage. (Notice updated 20/06/2022).

How an Offset mortgage works

An Offset mortgage can lower your monthly payments or reduce the term of your mortgage, saving you £1,000s in interest payments.

The mortgage will be secured on your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

An Offset mortgage works in a similar way to a standard mortgage, except for the inclusion of an extra feature; an Offset Saver savings account which is 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.

You can choose to offset your savings to reduce the term of your mortgage or to reduce your monthly payments.

How offsetting works

If you borrowed £200,000 and held £40,000 in our Offset Saver account, you would only be charged for the interest due on £160,000. That means by maintaining your payments at the agreed level you are effectively paying back more of your mortgage each month and that can have a dramatic effect on how quickly your mortgage is paid off.

Alternatively, you can decide to benefit from lower monthly payments. This won’t pay off your mortgage any quicker, but will make your monthly payments lower.

You can also overpay your mortgage regularly each month, or from time to time, and that extra credit can be used to reduce your payments at a later date.

You won’t earn interest on the Offset Saver account while it's linked to the mortgage.

offset mortgage table

Offset mortgage options

We have two offset mortgage options, allowing you to either:

  • reduce the term of your mortgage or
  • reduce your monthly payments

Option 1 - Term reduction (only available for repayment mortgages)

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, but 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.

Offest mortgage graph

In this example, the mortgage will be repaid four years earlier, saving you 48 payments of £758. In total that is £36,402 less to repay. Plus, unlike a regular savings account, you pay no tax on the money held in an offset account. The future tax treatment of offset savings accounts may vary.

Mortgage amount


Offset Saver account


Mortgage rate



30 years




Repaid early after 26 years!

Option 2 - Payment reduction

With this option, your offset savings allow you to benefit from lower monthly mortgage payments, but you won’t pay off your mortgage any sooner. Interest saved each month will be used to reduce the amount of your next month’s mortgage payment, so the more savings you offset, the lower your monthly payment will be.

As you're using your savings to benefit from lower monthly payments, your mortgage balance and remaining mortgage term will not reduce any quicker than if you were on a traditional non-offset mortgage.

Payment reduction summary


With an Offset Saver account

Without an Offset Saver account

Mortgage amount



Offset Saver amount

£40,000 (20%)


Mortgage rate




30 years (Max 40 years)

30 years (Max 40 years)




Monthly saving



Repaid after

30 years

30 years

Try our Offset mortgage calculator which will show you the difference between term reduction or payment reduction to your overall mortgage when you offset your savings with our offset mortgage.

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

Representative example

A mortgage of £95,716 payable over 21 years on a discounted variable rate for 2 years at 1.50% below our variable Managed Flexi Mortgage Rate and then on our variable Managed Flexi Mortgage Rate, currently 4.49%, would require 23 monthly payments of £511.93 and 229 monthly payments of £580.72, plus one initial interest payment of £242.99.

The total amount payable would be £146,418.26 made up of the loan amount plus interest of £49,286.26, an Application Fee of £317 which includes the Valuation Fee, a Product Fee of £999 and a Mortgage Exit Fee of £100

The overall cost for comparison is 4.5% APRC representative.

Do you need our help?

If you have questions or need our help please contact our friendly New Business Team.

Offset mortgage brochure

Find out more about our Offset mortgage and how it can work for you.

Offset mortgage calculator

Find out how much interest you can save over the term of your mortgage with our simple to use calculator.