Flexible Offset Mortgages
Offset the amount you need to repay on your mortgage against what you have in a savings account.
We’re a ‘whole of market’ broker, so you can compare deals from nearly every lender on the market.
We’re an award winning broker, with a 5.0 rating on Trustpilot from over 2,700 reviews!
You won’t be put in a system, you’ll be put through to a person, who cares about you.
Flexible offset mortgages made simple.
We know that it’s important to keep control over your income and outgoings. With your mortgage likely being one of your biggest debts, you might want a mortgage that offers some flexibility; if that’s the case, then an offset or flexible mortgage might be the right choice for you.
With an increasing number of flexible offset mortgage options now available on the market, we work with you to ensure we find the best option for your circumstances. The mortgage brokers at Key Solutions have experience helping people up and down the country achieve a flexible offset mortgage, and we can give you personalised comprehensive advice that helps you secure the best deal.
What is an offset mortgage?
An offset mortgage is a special type of home loan that combines a traditional mortgage with a linked savings account. The key feature is that the balance in your savings account directly reduces the amount you owe on the mortgage, effectively lowering the interest you pay.
How does an offset mortgage work?
By linking your current and savings account balances, offset mortgages reduce the overall mortgage balance. Many homeowners use offset mortgages to either reduce their monthly payments or to reduce their mortgage term. Your savings balance will be deducted from your mortgage balance, and you will only pay mortgage interest on what’s left on the balance of your offset mortgage.
Offset mortgage example: Your remaining mortgage balance is £150,000 and you have £25,000 in a current or savings account – by linking your account with your mortgage, you will only be charged mortgage interest on the remainder of the mortgage balance (£125,000).
Thinking about an offset mortgage? Here’s what you need to consider:
Offset mortgages can be a good option for borrowers who have a significant amount of savings and want to save money on their mortgage interest. It’s important to carefully consider the interest rates, availability, and the opportunity cost of not earning interest on your savings before deciding if an offset mortgage is the right choice for you.
Interest Rates
Offset mortgages typically come with higher interest rates compared to regular mortgages. However, if the difference is offset by the savings you make on interest due to a sizable balance in your linked account, it can still be beneficial.
Limited Availability
While popular, offset mortgages are not available everywhere. It's important to check with lenders in your region to see if they offer this type of product.
Earning on Savings
The money in your linked account won't earn any interest while it's being used to offset the mortgage. You'll need to weigh the benefit of reduced mortgage interest against the loss of potential earnings from a traditional savings account.
Find out how much you can borrow as a first time buyer with our free mortgage calculator.
Our calculator is designed to make things easier for you, giving you a quick guide on how much you can borrow for any residential mortgage.
We take live information from nearly every mortgage lender in the market to give you an idea of your personal mortgage affordability, based on your income and outgoings.
All you need to do is fill in your information and your mortgage affordability will be displayed to you in a matter of minutes.
What is a flexible offset mortgage?
A flexible offset mortgage combines two attractive features: the interest-saving benefits of a traditional offset mortgage and the flexibility offered by a flexible repayment mortgage. Similar to a standard offset mortgage, a flexible offset mortgage links your current account and/or savings account balance to your mortgage. But a flexible offset mortgage often comes with the ability to make additional payments towards your mortgage without any penalties, allowing you to reduce the balance faster and save even more on interest in the long run. Some lenders may even allow you to make occasional reductions in your monthly payments.
This flexibility can be a lifesaver if you encounter short-term financial difficulties. In some cases, you might even be able to take a temporary break from your regular mortgage payments altogether. This can be a safety net during unforeseen circumstances, but it’s important to remember that interest will still accrue during the payment holiday.
How does a flexible offset mortgage work?
Just like a regular offset mortgage, you’ll link your current account and/or savings account to your mortgage. The balance in these linked accounts then acts like a prepayment on your mortgage. The lender calculates your interest based on the difference between your mortgage balance and the total balance in your linked accounts. But with a flexible offset mortgage, you can make additional lump sum payments towards your mortgage without penalty, reducing the overall balance faster and saving you even more interest in the long run. You may also be able to take payment holidays, and reduce your monthly payments.
Flexible offset mortgage example: You take out a £200,000 flexible offset mortgage with a 3% interest rate. You also open a linked savings account where you maintain a balance of £30,000.
- Standard Mortgage Calculation: Without the offset feature, you would pay interest on the full £200,000 mortgage balance. In the first year, your annual interest payment would be £6,000 (3% * £200,000).
- Flexible Offset Mortgage Calculation: With the offset feature, the bank considers your £30,000 savings balance. So, your effective mortgage balance for interest calculation becomes £170,000 (£200,000 – £30,000). This reduces your annual interest payment to £5,100 (3% * £170,000), while still having flexibility in withdrawing from the savings account, taking payment holidays and reducing your monthly spend.
Thinking about a flexible mortgage? Here’s what you need to consider:
Interest Rates
Flexible offset mortgages often come with slightly higher interest rates than standard mortgages. However, the potential interest savings from the offset feature and the flexibility it offers can outweigh the higher rate, especially if you have a good amount of savings and plan to make overpayments.
Payment Holidays
In some cases, you might be able to take a temporary break from your regular mortgage payments altogether. This can be a safety net during unforeseen circumstances, but remember interest will still accrue during the payment holiday. If you're thinking about taking a payment holiday, you should always speak to your lender first, so they can explain the impact on your mortgage.
Overpayments & Underpayments
You can make additional lump sum payments towards your mortgage without penalty. This reduces the overall balance faster and saves you even more interest in the long run. Some lenders also allow occasional reductions in your monthly payments. This flexibility can be helpful for managing short-term financial fluctuations.
How to obtain a flexible or offset mortgage with Key Solutions Mortgages:
Initial consultation
We’ll meet with you to discuss your financial situation, including income, debts, and desired loan amount. Be upfront about your credit history; we can assess its impact and explain your options. In most cases, we will ask you to obtain a copy of your credit file so we can review it before we begin matching you up with prospective adverse credit lenders.
Lender matching & pre-qualification:
We’ll search for lenders specialising in adverse credit mortgages based on your situation. We’ll consider factors like the severity and age of negative credit marks. Pre-qualification will give you an estimated loan amount you might qualify for.
Documentation gathering:
You'll need to provide proof of income (pay slips, tax returns), employment verification and bank statements.
Application & negotiation:
We will guide you through the mortgage application process for the chosen lender(s). We can negotiate on your behalf to get the most favourable interest rate and terms possible!
Why choose Key Solutions for flexible/offset mortgages?
Your mortgage guaranteed
If we say you qualify for a mortgage, then we will stand by that decision and provide you with a 100% mortgage guarantee to you that you can get the funding you require. If we don’t, we will refund any associated cost you have incurred.
Your happiness guaranteed
Our advice to you is backed by our unique unconditional service guarantee which means if you are not happy with the service that we provide, just tell us why and we will immediately refund any fees that you have paid us.
Access to the mortgage market
As a trusted whole-of-market broker, we have access to nearly every mortgage product on the market as well as access to exclusive rates you won't get by going direct to a bank.
Quick and easy process
We will complete all research, administration and chasing on your behalf so you don’t have to worry about a thing! So leave it with us and your new mortgage offer will be with you quicker than you know it!
Mortgage Services
Flexible and offset mortgages: Making it easier to control your mortgage
If you are considering an offset or flexible offset mortgage our team of expert mortgage advisers can help. From initial enquiry to moving day, we’ll be there to assist you and make recommendations based on your individual circumstances, and we’ll offer you mortgage options best suited to you. Just give us a call on 0800 138 5856 or get in touch below.
Our advice to you is also backed by our unique unconditional service and 100% mortgage guarantees which means you can proceed with us in absolute confidence that you will get a guaranteed mortgage and the very best service!
Read more about our guarantees.
FAQs about Flexible Offset Mortgages
How to get a mortgage with bad credit?
Getting a mortgage with bad credit is possible, but it may require a larger deposit, a guarantor, or a lender specialising in adverse credit mortgages. Be prepared for higher interest rates compared to borrowers with good credit. We recommend speaking to us, we can assess your situation and recommend the best options for you!
How to get a mortgage with bad credit, but good income?
A good income can help offset some of the risks associated with bad credit for lenders. However, it won’t eliminate the need for a larger deposit or a higher interest rate. An adverse credit mortgage broker, like us, can help you find lenders who consider your income alongside your credit history.
What is a bad credit score for a mortgage?
There’s no universal “bad” credit score for mortgages in the UK. However, lenders generally view scores below 560 as less favourable. The specific requirements will vary by lender.
How to get a 2nd mortgage with bad credit?
Obtaining a second mortgage with bad credit is more challenging than a first mortgage. Lenders will heavily scrutinise your existing financial commitments and ability to handle additional repayments. Exploring options to improve your credit score before applying for a second mortgage is recommended.
Where can I get a mortgage with bad credit?
Not all lenders offer mortgages for those with bad credit. However, some specialist lenders do cater to borrowers with a history of adverse credit. A mortgage broker can help you find lenders who may be suitable for your situation.
How easy is it to get a mortgage with bad credit?
Getting a mortgage with bad credit is generally more challenging than with good credit. Expect a more complex application process with stricter requirements. However, with the help of a mortgage broker and a willingness to meet stricter lending criteria, it is still possible!
How much deposit do I need for a bad credit mortgage?
A larger deposit (typically 20-30% or more) can improve your chances of qualifying for a mortgage with bad credit. A larger down payment reduces the amount you need to borrow and demonstrates a stronger financial position to the lender.