Offset Flexible Mortgage

You can link your savings and current account balances to your mortgage and only pay interest on the difference between those accounts and your mortgage balance.

For example, if you had a £100,000 mortgage, savings of £9,000 and a current account balance of £1,000 - you would only pay interest on the £90,000.

Because you continue to make the same monthly repayments based on the full amount of your mortgage the balance reduces faster - in other words, you pay your mortgage off earlier.

All your accounts are still kept separate (you can withdraw from your savings or current account at any time), so it's easy to manage your money online, at your branch or over the phone.

Making the most of your savings

Whilst offsetting, you don't earn any actual interest on the accounts you link to your mortgage. Instead your savings are used to reduce (or "offset") your mortgage balance. What this means is that the effective rate earned on your savings is equal to the mortgage rate - currently 4%.

In addition, because you're not technically earning interest (you're avoiding paying the mortgage interest instead) you don't have to pay any additional tax on your savings income. Depending on your tax band this means your effective savings rate would be:

• 5.00% per annum for a basic rate taxpayer
• 6.66% per annum for a 40% rate taxpayer
• 8.00% per annum for a 50% rate taxpayer

• Pay off your mortgage faster
• Save on mortgage interest
• Flexibility to suit you

Compare our Offset Flexible Mortgage with a standard mortgage

	Offset Flexible Mortgage	Standard Mortgage
Reduce mortgage interest by linking other accounts	Only pay interest on the difference between your mortgage balance minus your combined savings and current account balances
Pay off your mortgage faster by linking other accounts	Your monthly payments stay the same and when you offset you save on interest. This enables you to pay your mortgage balance off faster
Make overpayments to your mortgage	Unlimited Make unlimited regular or lump sum overpayments with no early repayment charge (ERC)	Up to 10% You can normally overpay up to 10% without incurring an ERC
Underpayments and payment holidays (Interest will continue to accrue during your payment holiday and your monthly payments may increase afterwards)	You can apply to make underpayments or even take a payment holiday	Not normally available
Flexible borrowing - at your existing rate	You can apply for additional borrowing at your existing rate with no fee. You can also borrow back up to your agreed mortgage facility	You can usually only apply for additional borrowing at the rates available at the time and you may have to pay a product fee
No early repayment charge	You can repay your balance in full at any time with no ERC	An ERC will normally apply if you repay within the period of the mortgage deal
Access to Money Manager Service	Exclusive to Offset customers Automatically moves money between your current and savings accounts Helps you manage your money and avoid overdraft interest or charges
Product Range	There is one product available.	We have a selection of products including Fixed (rate set for a defined period) and Tracker (rate follows the Bank of England Base Rate). And specific mortgages such as First Time Buyer and Buy to Let.

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• Offset examples

The following examples illustrate how customers have benefited from Offset Mortgages with us. Although not based on any one individual the figures are true reflections of the savings achieved by our existing Offset customers. Why not use our Offset Calculator.

• Common questions

• Do I have access to my savings?
• Do I still earn interest on my savings?
• Do my mortgage payments stay the same?
• How many current and savings accounts can I include in an Offset Banking arrangement?
• Can I make additional payments to my mortgage?
• What is a payment holiday?
• What type of current account can I link to an Offset Flexible Mortgage?

Do I have access to my savings?
Yes – you can access them whenever you want.

Do I still earn interest on my savings?
You don't earn any actual interest on savings accounts you link to your mortgage. Instead your savings are used to reduce (or "offset") your mortgage balance. What this means is that the effective rate earned on your savings is equal to the mortgage rate - currently 4%.

In addition, because you're not technically earning interest (you're avoiding paying the mortgage interest instead) you don't have to pay any additional tax on your savings income.

Do my mortgage payments stay the same?
Your mortgage payments will depend on changes in interest rates. Increasing or decreasing the amount of savings that you offset will not change your payments.

If the interest rate goes down, you can:

• Keep your payment amount the same - which will help to reduce the outstanding balance on your mortgage quicker
• Reduce your payments - to match the new rate. There is a minimum monthly payment amount that you cannot go below

If you already pay more than the minimum repayment amount and the interest rates go up, as long as your payment continues to cover the new interest rate, we will not change your payments.

If you take a payment holiday, underpay or take additional borrowing, your repayments may also change.

How many current and savings accounts can I include in an Offset Banking arrangement?
You can include one eligible current account and up to three eligible Instant Access Savings accounts. With Business Offset you can include certain business current and savings accounts.

Can I make additional payments to my mortgage?
Yes. With an Offset Flexible Mortgage you can make additional payments to your mortgage any time and there's no penalty for repaying all or part of your mortgage early.

What is a payment holiday?
With a payment holiday, you don't need to make any mortgage payments for an agreed period up to six months. This can help ease the financial pressure if you need money for another purpose for a short term. Interest continues to accrue during a payment holiday and will be added to the loan. At the end of a payment holiday your monthly repayments are likely to be higher.

What type of current account can I link to an Offset Flexible Mortgage?
You can link a Select Account, Interest Paying Current Account, Royalties Gold, Royalties Premier, Select Silver Account, Black Account, or Private Bank Account to an Offset Flexible Mortgage. If you have eligible business accounts, these can also be used.