Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

The MoneySaving Forum: join to chat & swap tips with other MoneySavers. Learn how in the Forum Introduction Guide

image

Offset mortgage vs savings

Instead of a standard savings account, you could place your savings in an offset account linked to your mortgage. This means you won't pay interest on the mortgage debt of the equivalent amount of the savings. Use this calculator to work out if an offset mortgage works out better for you.

How big is your mortgage?

£

How much do you have in savings?

£
%

Mortgage details

Now we'll compare using a standard mortgage and a savings account vs using an offset mortgage. You don't need to have applied for the products below yet. Just tell us the best rates you've found for each.

Using a standard mortgage

%
£ %

Using an offset mortgage

%
£ %

Will you slash the interest you pay?

Here's how much offsetting your savings could save on your monthly and annual mortgage repayments, and by how long it could reduce the term of your mortgage (assuming rates stay the same).

The tables below factor in any interest lost on your savings to calculate the true cost over each year. Offsets generally win over the long-term (see graph), but you could save more by going for a cheaper short-term standard deal and switching to another when the term is up.

Note: Those with a relatively small sum in savings compared with their mortgage balance will probably not find offset the best option. Higher-rate taxpayers who earn less from their savings after tax is deducted may be best off with an offset, compared with the top paying savings account. They also suit those who'd like to overpay but don't want to lose access to their savings.

Standard mortgage + savings vs offset mortgage


swipe
Mortgage & Savings Offset mortgage
Monthly repayment £{{ resultsData.mortgage1.totals.monthly_payment | currency : "" :0}} £{{resultsData.mortgage2.totals.monthly_payment | currency : "" :0}}

IN FIRST YEAR

Interest cost £{{mort1Interest_cost | currency : "" :0}} £{{mort2Interest_cost | currency : "" :0}}
Interest earned on savings £{{mort1Savings_interest | currency : "" :0}} £{{mort2Savings_interest | currency : "" :0}}
Net interest cost £{{mort1Net_interest | currency : "" :0}} £{{mort2Net_interest | currency : "" :0}}

IN YEAR {{ compareOver }}

Interest cost £ {{ mort1YearInterest_cost | currency : "" :0}} £ {{ mort2YearInterest_cost | currency : "" :0}}
Interest earned on savings £ {{ mort1YearSavings_interest | currency : "" :0}} £ {{ mort2YearSavings_interest | currency : "" :0}}
Net interest cost £ {{ mort1YearNet_interest | currency : "" :0}} £ {{ mort2YearNet_interest | currency : "" :0}}

TOTAL COST OVER {{ compareOver }} YEARS

Interest cost £ {{ mort1TotalInterest_cost | currency : "" :0}} £ {{ mort2TotalInterest_cost | currency : "" :0}}
Interest earned on savings £ {{ mort1TotalSavings_interest | currency : "" :0}} £ {{ mort2TotalSavings_interest | currency : "" :0}}
Net interest cost £ {{ mort1TotalNet_interest | currency : "" :0}} £ {{ mort2TotalNet_interest | currency : "" :0}}

OVER FULL TERM*

Full term {{ mort1FulltermYears | currency : "" :0}} years {{ mort2FulltermYear | currency : "" :0}} years
Interest cost £ {{ mort1TermInterest_cost | currency : "" :0}} £ {{ mort2TermInterest_cost | currency : "" :0}}
Interest earned on savings £ {{ mort1TermSavings_interest | currency : "" :0}} £ {{ mort2TermSavings_interest | currency : "" :0}}
Net interest cost £ {{ mort1TermNet_interest | currency : "" :0}} £ {{ mort2TermNet_interest | currency : "" :0}}
Amount left in savings £ {{ mort1SavingsLeft | currency : "" :0}} £ {{ mort2SavingsLeft | currency : "" :0}}

*Full-term comparison is a bit misleading. Offsetting generally wins over the long-term, but by going for a cheaper short-term deal then switching later, you could save even more.

Total interest cost

Net Amount Interest Cost x Year

IMPORTANT! Please read...

This information is computer-generated and relies on certain assumptions. It has only been designed to give a useful general indication of costs.

It's important you always get a specific quote from the lender and double-check the price yourself before acting on the information. We cannot accept responsibility for any errors (please report faults above).