Guide to our Offset mortgage feature

Would you like to pay off your mortgage sooner and save thousands of pounds in interest?

You can use - or offset - your savings against your mortgage balance and significantly reduce the amount you pay in interest. While we don't pay you interest on this money, we don't charge any interest on the equivalent amount of money on your outstanding mortgage balance either so the interest owing on your mortgage is reduced.

For example, if you have a mortgage balance of £160,000 and an Offset Reserve of £20,000 you only pay interest on £140,000.

The amount you save by paying less interest on your mortgage can then be used to lower your monthly payments or cut years off your mortgage term so you could be mortgage-free sooner than you ever thought.

Use our offsetting calculator to see how much you could save.

Are there tax benefits?

By offsetting, you don't pay tax on the interest benefit gained. For example, on a mortgage rate of 6% you would need to earn the equivalent of 7.5% on your savings if you're a basic/lower rate tax payer and 10% if you're a higher rate taxpayer to match the benefit of offsetting.

Can I see an example of how the Offset mortgage feature works?

The following example is based on a loan of £160,000 over 25 years at 5.34% for 2 years reverting to 7.31% for the rest of the term. It assumes you make no withdrawals from your Offset Reserve.

In summary...

It's simple:

• You can pay your cash savings into an Offset Reserve either regularly or as a lump sum
• While we don't pay you interest on this money, we don't charge any interest on the equivalent amount of money in your mortgage so the total amount payable on your mortgage is reduced
• The benefit you receive from offsetting is tax-free
• You can move money in and out of your Offset Reserve at any time, regularly or in lump sums by phone, online or by direct debit (withdrawals take three working days to clear).

The facts:

• Offsetting is available on all our variable rate products.
• Activate offsetting on your mortgage for a one-off fee of £99.
• Tax relief may change in future.
• Moving money out of your Offset Reserve will increase the interest payable on your mortgage balance.

Where can I find out more about the Offset mortgage feature?

For more detailed information call us on 0845 845 8450