Estimate how a constant linked savings balance could reduce mortgage interest and shorten a repayment mortgage term.
Calculate potential offset mortgage savings
Assumes a repayment mortgage, constant rate and savings balance, monthly interest, unchanged standard payment and no fees.
How an offset mortgage works
An offset mortgage links savings to the mortgage. The savings remain in a separate linked account, but the lender calculates mortgage interest on the outstanding loan minus the eligible savings balance. The savings normally do not earn separate interest while they are offset.
This calculator keeps the standard repayment unchanged. Because less interest is charged, more of each payment reduces the mortgage capital and the loan may finish earlier.
See what your offset savings could change
Enter the mortgage balance and the amount you expect to keep in the linked savings account. Add your current mortgage rate and remaining term, then calculate. The result compares interest with and without the offset. It also shows the estimated payoff date when the standard monthly repayment stays the same. Try £10,000 and then £30,000 in savings to see how the interest saving changes.
Offset mortgage rates in the UK
The rate you enter should be the annual mortgage interest rate for the deal you want to test. This calculator does not show live offset mortgage rates or provide a lender quote. To compare an offset deal with a standard mortgage, run each rate separately and consider the product fee, the savings interest you may give up, and whether you can keep the linked savings balance in place. A lower mortgage rate elsewhere could outweigh the offset benefit; the tool alone cannot decide which deal is cheaper overall.
Mortgage repayments with an offset account
Use the offset mortgage repayment calculator result to understand why the loan might finish sooner: the model holds the normal monthly payment constant, so less interest means more of each payment goes towards the mortgage balance. It does not assume your linked savings directly repay the debt. Some lenders use an offset to lower the monthly payment instead; ask the lender which approach applies to your mortgage. The first-month interest reduction is a quick illustration, while the total saving depends on the entire repayment schedule.
Worked example
With a £200,000 mortgage and £30,000 in linked savings, interest initially applies to £170,000 rather than the full mortgage balance. At 4.5%, that reduces the first month’s interest by about £112.50. The long-term saving depends on the remaining term and whether the savings stay in the account.
| Input | Example |
|---|---|
| Mortgage balance | £200,000 |
| Offset savings | £30,000 |
| Initial interest-bearing balance | £170,000 |
| Rate | 4.5% a year |
Compare access, rates and fees
MoneyHelper explains that an offset mortgage links the mortgage to a savings account, while flexible mortgage features may allow overpayments and access to money under the product rules. Compare the mortgage rate, product fees, permitted linked accounts and withdrawal conditions before choosing a deal. See the official MoneyHelper mortgage interest-rate guide.
What this estimate does not include
The result does not include changes in the offset balance, future mortgage rates, savings interest forgone, tax, product fees, early repayment charges or lender-specific daily calculations. Some lenders reduce the monthly payment rather than the term, so check how the chosen product applies the benefit.
Compare a mortgage with and without offset savings
As a mortgage offset calculator, this tool keeps the monthly repayment at its calculated standard amount and compares interest with and without linked savings. To see the effect of a different offset balance, change just the savings figure and calculate again. An offset mortgage interest calculator can estimate savings under one assumed rate, but it cannot quote a live product.
When comparing offset mortgage rates UK lenders advertise, include the product fee and any savings interest you would give up. Ask the lender for an offset mortgage quote that states the rate, linked-account rules and whether the benefit reduces the term or the monthly payment. A cheap offset mortgage cannot be identified from the headline rate alone; compare its full costs against a standard mortgage for your circumstances.
Compare an offset mortgage with an ordinary mortgage
To calculate offset mortgage savings, enter your mortgage balance, savings balance and interest rate, then compare the result with a mortgage repayment calculator with offset set to zero savings. This helps you see how much interest your linked offset account may save.
An offset mortgage comparison should also include fees and the interest you might have earned on the savings elsewhere. This calculator estimates the effect of an offset balance; it does not produce live offset mortgage quotes or choose the best offset mortgage for you.
Offset calculator mortgage: test your savings balance
Try the savings you can comfortably keep in your linked account, then compare the result with a smaller balance. An offset account calculator estimate is more useful when it reflects money you can leave available throughout the mortgage term. If you expect to spend some of your savings, run a second scenario using the balance you expect to retain.
How to compare offset mortgage costs
Keep the mortgage balance and remaining term the same when comparing two scenarios. Enter each interest rate separately, then consider product fees and any interest you would give up on your savings. The best offset mortgage calculator for your planning is one that helps you understand these assumptions: a larger linked balance can save interest, but a higher mortgage rate or fee may reduce that benefit.
Quote offset mortgage: what to check before entering a rate
Use the rate and term from the actual quote you are considering. Check whether the quoted monthly payment includes fees and whether the lender uses your offset balance to reduce payments, shorten the term or offer a choice. This estimate can help you ask clearer questions when reviewing a quote; your lender’s calculation and account conditions determine the actual outcome.
Scottish Widows offset mortgage calculator and Barclays offset mortgage calculator searches
If you arrived looking for a Scottish Widows offset mortgage calculator or a Barclays offset mortgage calculator, use the figures from your own mortgage paperwork to explore a scenario here. This is an independent calculator and is not either lender’s official tool. It does not check current product availability, retrieve account balances or apply lender-specific rules automatically. Confirm the rate, fees and offset arrangements directly with the lender before relying on the estimate.
Related UK calculators
- Compare direct extra repayments with the Mortgage Overpayment Calculator UK.
- Estimate estate administration charges with the Probate Fees Calculator UK.
- Browse more tools on the United Kingdom Calculator homepage.
Frequently asked questions
Do offset savings repay part of the mortgage?
No. The savings normally remain separate and reduce the balance used to calculate interest rather than directly reducing the mortgage debt.
Can I withdraw money from the offset account?
Many products allow access, but withdrawals reduce the offset benefit. Check the lender’s linked-account conditions.
Do offset savings earn interest?
They commonly do not earn separate savings interest because their benefit comes from reducing mortgage interest. Product terms vary.
What happens if savings exceed the mortgage balance?
The interest-bearing mortgage balance cannot fall below zero. Extra savings above the mortgage balance usually provide no additional offset benefit.
Does this calculator work for interest-only mortgages?
No. It models a capital-and-interest repayment mortgage with the calculated standard payment held constant.