Offset Mortgage Calculator

An offset mortgage links a savings account directly to your mortgage. Rather than earning interest on your savings separately, the bank deducts the savings balance from your mortgage balance before calculating interest. If your mortgage is £250,000 and your savings are £25,000, interest is charged only on £225,000 — you pay £25,000 less principal each month, indefinitely, without actually paying off any capital. Your savings stay accessible at any time. The financial benefit is significant for borrowers who hold meaningful savings. In 2025/26, easy-access savings rates sit around 4–4.5% AER before tax. A 40% taxpayer retains only 60% of that, leaving roughly 2.4–2.7% net. A standard offset mortgage at 4.5% delivers the full 4.5% benefit tax-free — a clear advantage. For higher earners, the offset beats any ISA savings rate as well, because you cannot simultaneously hold mortgage debt and earn ISA interest at an equal net rate. This calculator compares your offset mortgage against the standard equivalent — same balance, same rate, same term — and shows: (1) the monthly payment based on the offset balance, (2) the total interest you pay over the shortened period, (3) the total interest you would have paid on the full balance, (4) the interest saving, and (5) the number of years and months by which your mortgage term is shortened. Offset mortgages are offered by a small number of UK lenders — including Barclays, First Direct, Coventry Building Society and Yorkshire Building Society. They are not suitable for everyone: if your savings balance is small relative to the mortgage, the rate premium may cancel out the interest saving. The tool helps you check whether offset makes financial sense at your exact balance. What this calculator does not model: changes to your savings balance over time, lender rate premiums over standard products, fees, or the effect of overpaying the monthly payment in addition to the offset. Pair with our Mortgage Overpayment calculator if you plan to combine overpayments with offset savings for maximum interest reduction.