Notices

  • Savings products - In preparation of the launch of our new and improved Online Service we have temporarily withdrawn online applications for all our savings products. You can still apply for these products by post or in branch. All savings products will be available to apply online from 12 May. We apologise for any inconvenience this may cause.

  • Savings customers: Your 2024 / 2025 Annual Interest Savings Summary are currently being processed and are due to be delivered by 30 April 2025.

  • We’ll shortly be making some changes to our Online Service to make it simpler and easier for you to use.  

    Our new Online Service will have a modern design, improved navigation and many added benefits.  

    Find out more about the changes

  • Mortgage products - On Wednesday 23 April, we made changes to our mortgage product range. These include rate adjustments across our fixed rate products, and an increase to our Owner Occupier Joint Borrower Sole Proprietor maximum LTV to up to 90% (with no additional security required) for loans up to £500,000.

  • Online Service update. Due to planned essential maintenance our Online Service will be unavailable from 6pm until 12am on Wednesday 7 May. Our Online Service will also be unavailable between 5.30pm on Friday 9 May until 9am on Monday 12 May. We apologise for any inconvenience this may cause.

How an Offset mortgage works

An Offset mortgage allows you to reduce your monthly mortgage payments or reduce the term of your mortgage, saving you money in interest payments. Learn more about an Offset mortgage.

The mortgage will be secured on your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
Please note: new customers can not apply for our Owner Occupier and Buy to Let Offset mortgage products, but existing borrowers can still apply for additional borrowing and product switches.

How offsetting works

An Offset mortgage works in a similar way to a standard mortgage. However, it has an additional feature known as an Offset Saver savings account. This savings account is linked to the mortgage. The amount of money in the Offset Saver savings account is deducted from the mortgage on which interest is charged.

You can choose to offset your savings to either reduce the balance of your mortgage (Repayment mortgages only) or reduce your monthly payments.

You have the option to overpay your mortgage regularly each month or make occasional additional payments. You can then use this extra money to reduce the amount of your future payments.

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

 

Frequently asked questions

View our full list of FAQs for more information.

Watch our short video that explains how the Offset Mortgage works:

You can choose to change between term reduction and payment reduction at any time provided this is no more than once a calendar month. Changes requested up to the 25th of a month take effect the following month; changes requested after this take effect a month later.
You can take money out of your Offset Saver account at any time up to a limit of £25,000 per day, and subject to keeping a minimum balance of £100. Of course the money taken out will no longer offset your outstanding mortgage. Only the money held in the account will count to reduce interest payable for the mortgage.
Whether you choose to reduce your term or reduce your monthly payments, you can also make lump sum repayments and / or regular monthly overpayments to reduce the mortgage balance. There is no limit on the amount you can pay off in any one year.
Yes, with our prior agreement you can underpay or take payment holidays equal to the value of overpayments you have built up earlier in the mortgage term.

Offset mortgage options

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

With this option, your offset savings help you to pay your mortgage off sooner. Offsetting does not affect your monthly mortgage payments. However, it does assist in saving on interest and paying off a larger portion of your mortgage each month. Your mortgage balance should reduce faster, and you may be able to pay your mortgage off early.

 

 

In this example, the mortgage will be repaid nine years and 4 months earlier, saving you 113 payments of £1,250 In total that is £140,472 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

£200,000

Offset Saver account

£40,000

Mortgage rate

6.39%

Term

30 years

Payment

£1,250.00

 

Repaid early after 20 years and 8 months!


Option 2 - Payment reduction

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

Using your savings to lower monthly payments won't decrease your mortgage balance or remaining mortgage term faster than if you were on a traditional mortgage.

Payment reduction summary

 

With an Offset Saver account

Without an Offset Saver account

Mortgage amount

£200,000

£200,000

Offset Saver amount

£40,000 (20%)

£0

Mortgage rate

6.39%

6.39%

Term

30 years (Max 40 years)

30 years (Max 40 years)

Payment

£1,037.00

£1,250.00

Monthly saving

£213.00

 

Repaid after

30 years

30 years

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

Representative example

A mortgage of £177,000.00 payable over 9 years initially on a discounted variable rate for 2 years at 2.15% below our variable Managed Flexi Mortgage Rate and then on our variable Managed Flexi Mortgage Rate, currently 8.54% would require 23 monthly payments of £2,159.32 and 85 monthly payments of £2,311.28 plus one initial interest payment of £932.09.

The total amount payable would be £248,329.25 made up of the loan amount plus interest of £70,055.25, an Application Fee of £175, a Product Fee of £999 and a Mortgage Exit Fee of £100.

The overall cost for comparison is 8.2% APRC representative.

 

Offset mortgage brochure

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

Download our brochure