What is an offset mortgage?

An offset mortgage is a type of mortgage where your savings are used to 'offset' the amount of interest charged on your mortgage. Your savings reduce the total mortgage amount, which in turn reduces the amount of interest charged.

Let's say you have a mortgage of £100,000 and savings of £10,000, you would only be charged interest on £90,000. Pretty good right?

It can mean big savings over time (the whole length of the mortgage).

Offset mortgages can be either fixed-rate (where the interest rate is fixed) or variable rate (where the interest rate can change).

Nuts About Money tip

Offset mortgages might not be right for everyone. Check which mortgage is best for you with a mortgage broker. Here's where to find the best online mortgage brokers.

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