Offset Flexible Mortgage
Helping you pay off your mortgage earlier
NatWest mortgages are available for 18s.
not keep up repayments on your mortgage
With an Offset mortgage, you can link your savings and current account balances to your mortgage and only pay interest on the difference between those accounts and your mortgage balance.
For example, if you had a £100,000 mortgage, savings of £9,000 and a current account balance of £1,000 - you would only pay interest on the £90,000.
Because you continue to make the same monthly repayments based on the full amount of your mortgage the balance reduces faster - in other words, you pay your mortgage off earlier.
All your accounts are still kept separate (you can withdraw from your savings or current account at any time), so it's easy to manage your money online, at your branch or over the phone.
Making the most of your savings
Whilst offsetting, you don't earn any actual interest on the accounts you link to your mortgage. Instead your savings are used to reduce (or "offset") your mortgage balance. What this means is that the effective rate earned on your savings is equal to the mortgage rate - currently 4.25%.
In addition, because you're not technically earning interest (you're avoiding paying the mortgage interest instead) you don't have to pay any additional tax on your savings income which could be beneficial if you have already used your personal savings allowance.
Do I have access and still earn interest on my savings?
Do I have access to my savings?
Yes - you can access them whenever you want.
Do I still earn interest on my savings?
Whilst offsetting, you don't earn any actual interest on the accounts you link to your mortgage. Instead your savings are used to reduce (or "offset") your mortgage balance. What this means is that the effective rate earned on your savings is equal to the mortgage rate - currently 4%.
In addition, because you're not technically earning interest (you're avoiding paying the mortgage interest instead) you don't have to pay any additional tax on your savings income.
What type of current account can I link to an Offset Flexible Mortgage?
You can link a Select, Select Silver, Select Platinum Account, Black Account, The Private Bank Account, Advantage Private, Advantage Gold or Graduate account to an Offset Flexible Mortgage. If you have eligible business accounts, these can also be used.
Do my mortgage payments stay the same?
Your mortgage payments will depend on changes in interest rates. Increasing or decreasing the amount of savings that you offset will not change your payments.
If the interest rate goes down, you can:
- Keep your payment amount the same - which will help to reduce the outstanding balance on your mortgage quicker
- Reduce your payments - to match the new rate. There is a minimum monthly payment amount that you cannot go below
If you already pay more than the minimum repayment amount and the interest rates go up, as long as your payment continues to cover the new interest rate, we will not change your payments.
If you take a payment holiday, underpay or take additional borrowing, your repayments may also change.
How many current and savings accounts can I include in an Offset Banking arrangement?
You can include one eligible current account and up to three eligible First Reserve savings accounts. With Business Offset you can include certain business current and savings accounts.
Can I make additional payments to my mortgage?
Yes. With an Offset Flexible Mortgage you can make additional payments to your mortgage at any time and there's no penalty for repaying all or part of your mortgage early.
What is a payment holiday?
You can apply to take a repayment holiday. With a payment holiday, you don't need to make any mortgage payments for an agreed period up to six months. This can help ease the financial pressure if you need money for another purpose for a short term. Interest continues to accrue during a payment holiday and will be added to the loan. At the end of a payment holiday your monthly repayments are likely to be higher.
We are a member of the Financial Services Compensation Scheme (FSCS). The Scheme can pay compensation to customers if they are eligible and the Bank is unable to pay claims against it. Compensation limits for Mortgage advice and arranging (for business conducted on or after 31 October 2004) - maximum £50,000 i.e. 100% of first £50,000 per person. Further information is available here (650K PDF) or visit www.fscs.org.uk.