Offset Flexible Mortgage

With an RBS Offset Flexible Mortgage your savings will work harder for you. They could save you thousands in mortgage interest, and help you pay your mortgage off early.

But your savings won't be locked away - you can still access them whenever you need.

You link your savings and your current account balances to your mortgage - and you only pay interest on the difference.

So, if you have 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.

You still make a monthly payment based on the full amount of your mortgage - so the interest you save reduces your loan faster and lets you finish your mortgage early.

Your savings won't earn an interest - nor will any credit balance in your current account. But you can always get access to your savings if you need to.

One eligible current account and up to three eligible savings accounts can be linked to your RBS Offset Flexible Mortgage. Your accounts are kept separately so it's still easy to manage your money at your branch, on the phone or online.

An Offset Flexible Mortgage means your savings will effectively be earning interest at the same rate as your mortgage.

Based on the current interest rate for an Offset Flexible Mortgage of 3.75%, the effective gross interest rate on your savings would be:

• 4.69% per annum for a basic rate taxpayer
• 6.25% per annum for a 40% taxpayer
• 7.50 % per annum for a 50% taxpayer

Your savings remain in your savings account - we don't add them to your mortgage account. So you can still make withdrawals whenever you want. And because there's no actual interest on your savings, there's no additional tax to pay either.

The Offset Flexible Mortgage offers you a range of great features:

• Unlimited over-payments - pay more towards your mortgage whenever you like to reduce your mortgage balance. You can arrange to re-draw overpayments up to your agreed mortgage limit at any time.
• Pay less each month or take a payment holiday - interest will continue to accrue during the payment holiday and your monthly payments may increase afterwards
• No charge for early repayment -if you repay part or all of your loan, you won't be penalised
• Extra borrowing - You can apply to increase your mortgage limit at any time
• Instant access - to your savings and current account - your money isn't locked away
• Simple to manage - with online banking, telephone banking, and at your RBS branch

• Business customers

If you're a partnership of no more than two people or a sole trader, our Business Offset service could help you save even more.

With Business Offset you can link the balance in your business accounts to your Offset Flexible Mortgage - and save even more interest.

The money in your business savings and current accounts doesn't earn any interest with Business Offset. Instead, the amount owing under your personal mortgage is reduced by the balance in these accounts - so your mortgage interest payments are lower.

Your monthly mortgage payments remain the same, so you may be able to finish your mortgage off years earlier.

You can include up to three eligible business savings accounts and one eligible business current account in a Business Offset arrangement. Your accounts stay separate from one another, so you can still access them all individually.

Sole traders can link their sole trader accounts to a joint personal mortgage. All the linked accounts must be in the same name for simple partnerships.

• Less mortgage interest to pay - you could make great savings on your mortgage interest payments
• Finish your mortgage off faster - since you'll be paying less interest, more of your monthly payment will go towards reducing the capital outstanding - so you could pay your mortgage off years earlier
• Less tax to pay - since your business accounts won't earn any interest while linked to your mortgage, there's no tax on interest earnings for your business
• Get more from your tax funds - if you have a separate business account for paying tax or VAT, you can link them to your mortgage as well

Business Offset lets you make overpayments on your mortgage when your business has extra funds and to underpay or take a payment holiday when cash flow is tighter - so it's great for seasonal businesses. Interest will continue to accrue during any payment holiday and your monthly payments may increase afterwards.

• Common questions

• What type of current account can I link to an Offset Flexible Mortgage?
• Do I earn interest on my savings?
• Do my mortgage payments stay the same?
• How many current and savings accounts can I include in offset banking?
• How much can I borrow?
• How do I pay my mortgage?
• Can I make additional payments to my mortgage?
• Can I have an interest only mortgage?
• What is a payment holiday?

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

Do I earn interest on my savings?
No, unless your savings are more than your mortgage. Your savings are used to offset the balance under your mortgage and reduce the interest you pay on your mortgage. Remember, you can access the money in your savings account whenever you want.

Do my mortgage payments stay the same?
Your mortgage payments will depend on changes in interest rates. 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. You can also include certain business current and savings accounts.

• More on Business Offset

How much can I borrow?
The amount of money you can borrow depends on affordability. Use our mortgage calculator to find out how much you can save with an Offset Flexible Mortgage.

How do I pay my mortgage?
Simply complete a direct debit form when you sign your mortgage offer and the minimum payment will be debited monthly.

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.

Can I have an interest only mortgage?
Yes. We work out the interest that needs to be paid each month based on the full amount of your mortgage - ignoring any offsetting balances. If the interest due is less than the payment made, the outstanding mortgage will reduce.

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 repayments are likely to be higher.