Mortgages

How your Offset Savings Mortgage works

With conventional mortgage and savings accounts, you pay interest on the money you borrow and earn interest on the money you save.

It's well known that the interest you earn on your savings is less than the interest you pay on your mortgage. And you may get charged tax on the interest you earn.

That's where the Britannia Offset Savings Mortgage is different, by making your savings work much harder for you. We offset the amount of your savings against your mortgage so, over the life of the mortgage, we only charge you interest on the difference.

Your monthly payments will not be reduced by offsetting. This is because your savings balance may vary each month and your mortgage payments would have to change each month making budgeting more difficult for you. This product is designed to save you money over the long term.

Because your monthly payments are not reduced by offsetting, you will actually be overpaying on your mortgage, giving you the benefit of reducing your mortgage balance. This in turn reduces still further the amount of interest you will pay over the term of your mortgage.

For example, if you had a mortgage of £100,000 and savings of £10,000 we would only charge you interest on £90,000.

Even though your accounts are linked together, you still have complete access to your savings - and all the flexibility of separate accounts.

So, you choose when and how much to save. You could invest a one off lump sum at the start of your mortgage, or you may prefer to save regular monthly amounts, either way it's up to you. You may even choose to do both.

Simply, the more savings you have, the less interest you pay and the quicker you pay off your mortgage.

Whenever there is a change in the Offset Savings Mortgage interest rate, we will recalculate your monthly payments based on your reduced mortgage balance to ensure that your mortgage will be paid off over the original agreed term. So at this time your monthly payments may reduce.

If you want to pay off your mortgage sooner, you can contact us either to arrange to maintain your payments at a higher level, or ask us to reduce the term of your mortgage.

Will you earn interest on your savings?

Your Offset Savings Mortgage will not pay you any interset on your savings (but then you won't be taxed either). However, because you are offsetting this balance against your mortgage, you are saving the interest that you would have had to pay on your mortgage.

You can add to your savings or make overpayments

If you suddenly find yourself with a lump sum or you have a little extra left over each month you could add it to your savings balance or pay more off your mortgage.

• Add to your savings whenever you want to and still have access to your money via a cashcard at any LINK cash machine or Britannia branch.
• You can make overpayments directly off your mortgage at any time, without penalty, which gives you the opportunity to pay your mortgage off early.
• If you keep adding to your savings or make regular overpayments, you could save thousands of pounds in interest.

Please remember that if the interest rate changes, your revised payment will be calculated to pay off your mortgage over the original agreed term. So, if you wish to continue overpaying each month, you should review the total amount you are paying to ensure that you are still overpaying by the amount you want to.

What if you need to dip into your savings?

You never know when you'll need a bit of spare cash, whether it's for home improvements or a new car. With our Offset Savings Mortgage, you can withdraw from your savings at any time without giving any notice. Remember though that this will mean that the amount of interest you pay on your mortgage will increase.