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Author
Atousa Cunnell
Updated by
James Andrews
Last updated
February 19th, 2026
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What is an offset mortgage?

An offset mortgage is a type of home loan where your savings and/or current account balance is linked to your mortgage so that the lender calculates interest only on the mortgage balance minus your savings balance. This can reduce the overall interest you pay.

How does an offset mortgage work?

An offset mortgage links your savings to your mortgage so interest is only charged on the balance after savings are deducted, reducing the interest you pay.

  • You take out a mortgage and open a linked savings or current account

  • The lender subtracts your savings balance from your mortgage balance

  • Interest is charged only on the remaining amount, for example for every extra £1 saved, you pay interest on £1 less of your mortgage balance. Conversely, withdrawing savings increases the interest you pay.

You can usually choose to:

  • pay lower monthly repayments, or

  • keep repayments the same and pay off your mortgage faster

Your savings remain accessible, but if you withdraw money, the amount offset and the interest saving is reduced.

Simple offset mortgage example:

If you have a £200,000 mortgage and £20,000 in linked savings, you’ll pay interest on £180,000, not the full mortgage balance. This can reduce the total interest you pay over time.

Make sure to compare offset mortgages with potential earnings from high-interest savings accounts to find the best option.

Mortgage experts say:

"An offset mortgage links your savings to your mortgage so interest is only charged on the balance after savings are deducted, reducing the interest you pay."

How to find the best offset mortgage rate with Mojo Mortgages

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Offset mortgage rates

Offset mortgage rates are typically slightly higher than those on standard repayment mortgages. But in many cases, the interest savings you make by offsetting your savings balance can more than make up for this difference. As with any mortgage, the offset mortgage rate you’re offered will depend on your credit history and how much you want to borrow.

To get the best offset mortgage rate, it’s important to decide whether you’d save more by keeping your money in a high-interest savings account or by choosing a different type of mortgage with a lower interest rate.

For example: if your savings account pays 0.5% interest on a £20,000 balance (giving you £100 a year), you should subtract this from the total you’d save through an offset mortgage to work out which option offers better value.

Are monthly repayments cheaper with an offset mortgage?

They can be. Most lenders give you two options:

  • You choose to pay interest only on the mortgage balance after subtracting your savings.

  • Or, you keep your monthly repayments the same but you're effectively overpaying your mortgage, shortening the mortgage term without increasing your monthly costs.

Can I still access my savings account during an offset mortgage?

Yes you can normally still access your savings while they're in an offset account. However, bear in mind that if you withdraw a chunk of savings then this will mean you won't benefit as much from a reduction in interest payments.

Individual lenders may also have specific rules on withdrawals from an offset savings account, such as the amount of notice you need to give them. Make sure to check the terms and conditions for your offset mortgage deal.

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Is an offset mortgage a good idea?

Pros

You pay less interest on your mortgage debt overall, allowing you to either finish repaying your mortgage earlier or make smaller monthly payments
You can still access your savings if you need to
They can be tax efficient for higher rate taxpayers, as you pay no tax on savings in a linked savings account
Some offset mortgages let you link up your current account as well as your savings account or multiple savings accounts

Cons

Offset mortgage rates can be higher than standard repayment mortgages
They are most beneficial to those with a lot of savings, so if your savings are fairly small, this type of mortgage may not offer you the greatest benefits.
Some lenders may expect you to maintain a minimum balance, so you’ll need to factor this into your future financial plans
Fewer lenders offer offset mortgage deals, so you may have less choice
If the best offset mortgage rates are high, it may be better to use your savings to overpay a standard repayment mortgage instead
“Offset mortgages can be a good way to make your savings work harder for you, either by reducing your mortgage term or your monthly repayments. But make sure to check that you won't make more in interest with another savings account than you'll save with an offset mortgage.”
Author image
Atousa Cunnell
Content Producer - Mortgages

Offset mortgages FAQs

Can I have more than one account for an offset mortgage?

Yes, many lenders let you link multiple savings accounts to your offset mortgage and some even offer the option to link family members savings accounts.

Can you offset 100% of your mortgage?

There’s not usually a limit to what you can offset, most lenders let you pay as much as you like into the savings account. If your savings balance is 100% of your mortgage, you won't be charged any interest.

Can I repay my mortgage early with an offset mortgage?

Yes you can repay your mortgage early with an offset mortgage.

If you choose to keep your monthly repayments the same while offsetting your savings, you'll effectively be overpaying your mortgage each month. This helps reduce your mortgage balance faster, allowing you to pay off your mortgage early and shorten the overall term.

Should I put down a bigger deposit instead of getting an offset mortgage?

It depends on your situation, but in many cases, putting down a bigger deposit instead of choosing an offset mortgage could save you more money.

A larger deposit lowers your loan-to-value (LTV) ratio, which usually gives you access to better mortgage rates and deals. This can sometimes lead to greater savings than using an offset account.

However, the right choice depends on your personal circumstances and financial goals. It’s a good idea to speak to a mortgage broker who can compare the full market and help you decide whether a bigger deposit or an offset mortgage will work best for you.

About the author

Author imageAtousa Cunnell
Atousa Cunnell
Atousa is a Content Manager for money.co.uk, responsible for writing and editing a wide range of mortgage content that are helpful to the reader.

money.co.uk is not a mortgage intermediary and makes introductions to Mojo Mortgages to provide mortgage solutions.

money.co.uk and Mojo Mortgages are part of the same group of companies. money.co.uk is a trading name of Dot Zinc Limited, registered in England (4093922) and authorised and regulated by the Financial Conduct Authority (415689). Our registered address is: The Cooperage, 5 Copper Row, London, England, SE1 2LH.

Mojo is a trading style of Life's Great Limited which is registered in England and Wales (06246376). We are authorised and regulated by the Financial Conduct Authority and are on the Financial Services Register (478215). Mojo’s registered office is The Cooperage, 5 Copper Row, London, SE1 2LH. To contact Mojo by phone, please call 0333 123 0012.