🏦Offset Mortgage Calculator

About this tool

Enter your mortgage balance, linked savings, the offset rate and the remaining term, plus a savings account rate and your tax rate to compare. You'll see the normal monthly payment, the interest saved and how much sooner you'd finish if you keep paying that amount, or the lower payment over the full term, with a first-year comparison against simply earning savings interest.

How offset mortgages work

An offset mortgage links your savings, and sometimes your current account, to your mortgage. Instead of earning interest, the savings are subtracted from the balance before interest is charged, so with £250,000 borrowed and £30,000 saved, you only pay interest on £220,000. The savings stay yours and remain accessible. There are two ways to use the benefit. Keep the normal monthly payment, and more of each payment goes towards the capital, so you finish earlier and save interest. In the example at 4.8% over 25 years, that's roughly £58,000 of interest and over three years. Or ask the lender to lower the monthly payment instead. Because you're saving interest rather than earning it, the benefit isn't taxable. That makes offsetting most valuable for higher and additional-rate taxpayers, and for people with savings above the personal savings allowance. Compare the after-tax savings rate you could get elsewhere with the mortgage rate: when the mortgage rate is higher, offsetting wins. Offset deals usually cost a little more than the best standard rates, so the savings need to be large enough to make up for it. Honest limits: the model keeps your savings constant, while real balances rise and fall. Lenders differ in what counts towards the offset, and fees and early-repayment charges matter. This isn't mortgage advice, so speak to a broker. The mortgage calculator, the refinance calculator and How mortgage amortization works, and why overpaying early matters are related.

Frequently asked questions