Understanding how Offset mortgages work

What is an offset mortgage?

An offset mortgage is a way of linking your mortgage with your savings. The way it works is simple. By moving some of your savings into a special Offset Savings Account, instead of earning interest your savings reduce the amount of interest you pay on your mortgage.

The key benefits at-a-glance:

Choose to reduce your monthly payments
Choose to pay off your mortgage sooner
Link family and friends' savings with Offset Plus
Make overpayments whenever you like
Make underpayments (with our consent, providing overpayments have previously been made)
Benefit from great equivalent savings rates (scroll down to read more about this) on your savings
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If you have money in an offset savings account
The savings will be offset against your mortgage
So interest is only charged on the difference

Offset calculator

Our offset calculator will show you how you could save money and pay off your mortgage sooner.

Takes less than 2 minutes to complete

How are my mortgage and savings combined?

Your Offset Mortgage Account and your Offset Savings Account remain separate, so you'll always have instant access to your savings. However, they are linked because you only have to pay interest on the difference between the amount in your savings and the amount of your mortgage. This means that the more you save, the less interest you'll pay on your mortgage.

What if I don't have a lot of savings?

Your family and friends can give you a helping hand by linking their savings to your offset mortgage. Visit our Offset Plus page to find out more.

How do offset benefits work?

Before your mortgage starts, choose ONE of the three benefit options below. You're free to change your mind at any time in the future.

Reduced current payments

Benefit from lower mortgage payments now, but keep the same mortgage term.


Reduced payments in future years

Benefit from lower mortgage payments every time your account is reviewed annually, but keep the same mortgage term.


Reduced term

Benefit from paying off your mortgage quicker, but keep your monthly payments the same.

What is the equivalent savings rate?

In effect, the money in your savings account will achieve the equivalent rate that you are being charged on your mortgage. This is because although no interest is earned on your savings, the interest on your mortgage is only charged on the difference between your offset mortgage balance and your offset savings balance.

The equivalent savings rates for each offset product are shown in the individual product description pages, and are based on the current interest rate of that mortgage product. Where this rate is variable or reverts to a variable rate, the equivalent savings rate will change when the relevant mortgage interest rate changes.

With traditional mortgage and savings products you usually pay a higher rate of interest on your borrowings than you receive on your savings. If you're a taxpayer, you may also pay tax on the interest that you earn on your savings.

With a Yorkshire Building Society offset mortgage, the balance on your savings account is taken into consideration before we calculate the amount of mortgage interest payable. This means you’ll reduce the interest you pay, which is equivalent to your savings achieving a benefit at the mortgage interest rate. Additionally, you may reduce your tax liability because your savings wont be earning any interest.

What offset mortgages do you offer?

Whether you're a first time buyer or already have a mortgage, looking for a fixed rate or a tracker option, we have an offset mortgage to suit you.

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