# What is an offset mortgage? > Quick answer · Last updated 4 July 2026 Canonical HTML: https://moneyguide.org.uk/answers/what-is-an-offset-mortgage/ Markdown mirror: https://moneyguide.org.uk/answers/what-is-an-offset-mortgage.md ## In short An offset mortgage links your current and savings accounts to your home loan so you only pay interest on the net balance. Savings do not earn interest, but they reduce the mortgage interest you owe — which can beat easy-access rates after tax, especially for higher-rate taxpayers. With an offset mortgage, money in linked current and savings accounts is offset against your mortgage balance before interest is calculated. If you owe £200,000 and hold £30,000 in linked accounts, you pay interest on £170,000. You do not receive savings interest on the offset pot, but the reduction in mortgage interest often works out better than a taxable savings account. Offset deals are most valuable for higher-rate taxpayers with meaningful savings who want to keep cash accessible. For 2026/27, a basic-rate taxpayer with £1,000 Personal Savings Allowance may still benefit, but the advantage grows when savings interest would otherwise be taxed at 40% or 45%. Offset mortgages are usually variable or tracker products, so your rate moves with the lender's standard variable rate or Bank of England base rate. Family offset arrangements let relatives link their savings to your mortgage without giving up ownership of the money — useful for parental help without a gift. Fees and rates can be higher than non-offset deals, so compare the net saving: mortgage interest saved minus any extra arrangement cost and the savings interest you forgo. ## Related - [Can I overpay my mortgage?](https://moneyguide.org.uk/answers/can-i-overpay-my-mortgage-without-penalty/) - [Mortgages guide](https://moneyguide.org.uk/mortgages/) ## Primary source gov.uk/buying-a-home/preparing-to-buy --- Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Information only — not regulated financial advice.