Home Mortgages Mortgage & rate types Offset Mortgages

Offset Mortgages

Only available to existing Offset Mortgage customers

Your home may be repossessed if you do not keep up your payments

Use your savings to reduce your interest payments

Our Offset Mortgage takes into account other money you have with us when working out your interest payments. So every pound that’s in an eligible savings or current account with us, is one less pound you pay mortgage interest on. Say you have a £100,000 mortgage, savings of £20,000 and a current account with £1,000 in it. You only pay interest on the difference between the money you have and the money you owe – which in this case is £79,000.

Offset Mortgages are interest only mortgages, which means you’re responsible for paying off the capital. You need to show you have a repayment strategy in place to achieve this – it could be an endowment policy, an investment or another savings plan.

Key features

  • As of 3rd April 2023, Offset Mortgages are only available to existing Offset Mortgage customers
  • borrow up to a maximum of 75% of the property's value
  • use your savings to reduce your interest payments
  • this is an interest only mortgage
  • you can make unlimited overpayments whenever you like – but Early Repayment Charges may apply
  • if you repay any of the capital during the mortgage, you may be able to borrow it again whenever you like – but this will obviously increase your interest payments and could increase the time it takes to pay it off.

Things to bear in mind

  • this type of mortgage requires a repayment strategy. Learn more about which repayment strategies are acceptable for our purposes here
  • we don’t lend for business purposes or Buy to Let
  • Early Repayment Charges may apply depending on your interest rate or if you pay it all off early
  • the value of tax benefits will depend on your individual circumstances and tax rules may change in the future
  • you can redraw any capital you’ve paid off, but you must make sure you can still repay the outstanding capital by the end of the mortgage term
  • any borrowing linked to your Offset Mortgage will be secured against your property.

† Lines are open Mon to Sat 8am to 8pm and Sun 9am to 8pm.

Applying for an Offset Mortgage

Our Offset Mortgage is no longer on sale to new customers. If you hold an existing Offset Mortgage certain changes are still allowed. When applying for a change to your Offset Mortgage you’ll need to let us know how you plan to repay your mortgage. For example the monthly amount you intend to save for ad hoc capital, to your Stocks and Shares ISA, investments, or the monthly payment amount to an endowment policy.

Note: Repayment strategies won't be acceptable if they're jointly held with other parties who aren't also party to the mortgage application. first direct can't recommend or provide advice in relation to the suitability or selection of any repayment strategy.

Here are details of the types of repayment strategies we accept.

Repayment Strategy Evidence Required
Sale of another property - this shouldn't be your primary residence, a commercial property or the property this mortgage is for.

Repayment Strategy based on 75% of the current property value, less any outstanding secured borrowing.
  • mortgage statement or Offer Document dated within the last 35 days, if applicable. An internet print/statement is acceptable
  • solicitor's letter confirming ownership of the second property or copy of the Register of Title from the Land Registry, Registers of Scotland etc.
  • a professional valuation by an RICS Surveyor or suitable Automated Valuation dated within the last 12 months.
Endowment policy

Repayment Strategy based on the lowest projection provided in the annual endowment policy statement. 		Endowment policy statement including endowment projection dated within the last 12 months.
UK sterling cash savings (Savings, Investments, Cash ISA, Premium Bonds, Sharesave).

Repayment Strategy based on 100% of existing cash savings held in a UK savings/bank account, Cash ISA or Premium Bonds. 		Latest account statement dated within the last 35 days to evidence the latest value and evidence of monthly contributions. An internet print/statement is acceptable.
UK based Stocks and Shares ISA

Repayment Strategy based on 50% of the value shown on the latest account statement. 		Latest Stocks and Shares ISA account statement dated within the last 35 days to evidence the latest value and evidence of regular and on going contributions. An internet print/statement is acceptable.
Other UK based investments - Unit Trust, OEIC, Investment Bonds, Shares, Gilts.

Repayment Strategy based on 50% of the value shown on the latest account statement. 		Latest account statement or certificate dated within the last 35 days to evidence the latest value and evidence of regular and on going contributions. An internet print/statement is acceptable.
Ad hoc/Regular repayment of capital

The application of earnings (guaranteed or variable) to reduce the mortgage balance or to build savings over the mortgage term. We'll accept 25% of the annual average of any variable income (e.g. work bonuses) and 100% of any guaranteed income. 		Variable Income will only be acceptable if paid weekly, fortnightly, four weekly or monthly. Documentary evidence of the source and regularity of income will be required.

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Think carefully before securing other debts against your home. Your home may be repossessed if you don't keep up repayments on your mortgage.

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