Offset Flexible Mortgage

A NatWest Offset Flexible Mortgage is a great way to get your savings working harder for you. Your savings could help you save thousands of pounds in mortgage interest, and let you finish your mortgage faster.

The great news is you’ll always have access to your savings whenever you need them.

You link your savings and your current account balances to your mortgage - and you only pay interest on the difference.

So, if you have 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.

You still make a monthly payment based on the full amount of your mortgage - so the interest you save reduces your loan faster and lets you finish your mortgage early.

You’ll not earn any interest on your savings or current account. But you can always get your hands on your savings if you need to.

You can link up to three eligible savings accounts and one eligible current account to your Offset Flexible Mortgage. All your accounts are kept separately so it is easy to manage your money online, at your branch or on the phone.

With an Offset Flexible Mortgage you’ll effectively be earning the mortgage interest rate on your savings.

Based on the current interest rate for an Offset Flexible Mortgage, of 3-75% the effective gross interest rate on your savings would be:

• 4.69% per annum for a basic rate taxpayer
• 6.25% per annum for a 40% rate taxpayer
• 7.50% per annum for a 50% tax payer

Your savings always stay in your savings account – they’re never added to your mortgage account. This means you can make withdrawals at any time. Because you don’t earn any actual interest while offsetting your savings, you don’t have any additional tax to pay.

The Offset Flexible Mortgage is packed with great features.

• Unlimited over-payments – make additional mortgage payments whenever you like to reduce your mortgage balance. You can arrange to re-draw overpayments up to your agreed mortgage limit at any time
• Take a payment holidays or pay less each month – Interest will continue to accrue during the payment holiday and your monthly payments may increase afterwards
• No Early repayment charge – even if you repay your loan in full
• Borrow more. You can also apply to increase your mortgage limit at any time
• Instant access – to your savings or any other accounts – your money isn’t locked away
• Easy to manage - online, by phone, and in branch

If you’re a sole trader or a partnership of no more than two people, you could benefit from our Business Offset service.

This lets you to link the balance in your business accounts to your personal mortgage – saving you even more.

With Business Offset you don’t earn any interest on the money in your business current and savings accounts. The balance in these accounts is deducted from the amount owing under your personal mortgage – so you pay less mortgage interest.

Because your monthly mortgage payments stay the same, you could potentially finish your mortgage faster.

You can include one eligible business current account and up to three eligible business savings accounts in a Business Offset arrangement. Your accounts remain independent of one another, so you can manage them individually.

For partnerships, all the linked accounts must be in the same name. Sole traders can link their sole trader accounts to a joint personal Offset Flexible Mortgage

• Save on mortgage interest – pay less interest on your personal mortgage
• Finish your mortgage faster – because your mortgage payments remain the same, and you’ll be paying less interest, you could pay off your mortgage years earlier
• Pay less tax – because your business accounts don’t earn any interest while they’re linked to your mortgage, your business will have no interest earnings to pay tax on
• Make tax work for you – if you keep a separate business account for paying VAT or tax, you can link it to your mortgage as well

With Business Offset banking you can make overpayments on your mortgage when your business is doing well and to underpay or take a repayment break when cash flow is tight – great for seasonal businesses. Interest will continue to accrue during the payment holiday and your monthly payments may increase afterwards.

• What type of current account can I link to an Offset Flexible Mortgage?
• How many current and savings accounts can I include in offset banking?
• Do I earn interest on my savings?
• Do my mortgage payments stay the same?
• How much can I borrow?
• How do I pay my mortgage?
• Can I make additional payments to my mortgage?
• Can I have an interest only mortgage?
• What is a payment holiday?

What type of current account can I link to an Offset Flexible Mortgage?
You can link a Current Plus, Private, Advantage Private, Advantage Gold or Graduate account to an Offset Flexible Mortgage. If you have eligible business accounts, these can also be used.

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 First Reserve savings accounts. You can also include certain business current and savings accounts.

• More on Business customers

Do I earn interest on my savings?
No, unless your savings are more than your mortgage. Your savings are used to offset the balance under your mortgage and reduce the interest you pay on your mortgage. Remember, you can access the money in your savings account whenever you want.

Do my mortgage payments stay the same?
Your mortgage payments will depend on changes in interest rates. 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 much can I borrow?
The amount of money you can borrow depends on affordability. Use our mortgage calculator to find out how much you can borrow based on the amount you can afford to repay each month.

How do I pay my mortgage?
Simply complete a direct debit form when you sign your mortgage offer and the minimum payment will be debited monthly.

Can I make additional payments to my mortgage?
Yes. With an Offset Flexible Mortgage you can make additional payments to your mortgage any time and there’s no penalty for repaying all or part of your mortgage early.

Can I have an interest only mortgage?
Yes. We work out the interest that needs to be paid each month based on the full amount of your mortgage – ignoring any offsetting balances. If the interest due is less than the payment made, the outstanding mortgage will reduce.

What is a payment 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 repayments are likely to be higher.