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By Pete Mugleston | Mortgage Advisor

Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 8th December 2020*

Offset mortgages are a popular way to make big savings on your mortgage, and we get a lot of enquiries about how these products work, how they might reduce your repayments or mortgage term, and specifically, how to use a mortgage offset calculator to find the best solution in your circumstances.

In this article, we will look at:

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What is an offset mortgage calculator used for?

You’ve looked into the possible benefits of an offset mortgage, and are now keen to find out whether switching to or applying for one could save you some money on interest and repayments. Finding an offset mortgage calculator is a good first step to finding out whether it’s likely to be worth it in your circumstances, which will usually depend on how much you have in savings or plan to save, how long the term of your mortgage is likely to be and other factors.

For a more detailed overview of offset mortgages, who can apply for one and how they work, take a look at our dedicated offset mortgage section.

How to use an offset mortgage calculator

Before you can make use of an offset mortgages calculator, you’ll need to ensure you have several key pieces of information to hand.

You’ll find that these calculation tools all look a little different from each other, but the data you’ll need to ‘plug in’ will usually be the same.

Required information to calculate offset mortgage repayments will include:

  • The loan amount:
    Either the remaining balance on your existing mortgage if switching, or the required amount if this is to be a new mortgage.
  • Property value of your home or property you’re planning to buy:
    How much you have in savings or the amount you are prepared to link to your mortgage account if you plan to only link a portion of your savings. Some mortgage calculators also allow you to state how much you could continue to pay into the savings account per month going forward.
  • The remaining term, in years, on your mortgage, or the term you plan to apply for
  • Repayment type:
    (actual or desired), i.e. interest only or repayment
  • Tax band:
    Whether you pay standard, higher or additional rate tax on your income.

Once you’ve used all these values to populate the calculator, it should be able to give you some useful insights into how an offset mortgage could affect your repayment plan when compared with your existing mortgage, or with another typical non-offset product.

For example, it should be able to tell you:

  • The number of years you could shave off your mortgage term by offsetting the balance but keeping repayments the same, and:
  • How much an offset mortgage could reduce your monthly payments.

Depending on your budgeting goals, this should help you to decide whether it makes more sense to use offsetting to lower your mortgage repayments, or to shorten the term over which you need to keep making them – as well as what proportion of your savings you want to link to your mortgage if you plan to keep some savings separate.

For example,  some offset mortgage calculators  used by high street lenders display the results in a graph form, so you can easily compare the benefits of offsetting whether you want to pay off your mortgage more quickly or reduce the monthly cost.

Don’t forget that any information provided to you by a mortgage calculator are for illustration purposes only and while they can be useful tools for helping you to budget, they shouldn’t be treated as 100% accurate.

For a more accurate picture, we recommend speaking to an expert who can factor in all your individual circumstances and priorities.

Where to find the best offset mortgage calculator

There are numerous free offset mortgage calculators available online, usually made by lenders that offer offset mortgages or by personal finance or comparison sites.  While these tools can offer a helpful way to get a ballpark figure while you’re researching options, it’s in your best interests to speak to a whole-of-market broker for a more accurate idea of any potential savings, as different calculators don’t always return the same results.

This is because not all calculators are created equal, and while some only offer the basics on a minimal amount of information provided by you (such as the value of your savings and the loan amount), others have additional features, giving you the chance to factor in over-payments or even to compare the amount of interest you might save with an offset mortgage against the amount of interest you’d cease to ‘earn’ by linking your savings account with your mortgage.

This information will certainly be helpful if you’re undecided on how much you want to link and how much to retain in an ISA or other savings account for example.

However, an experienced advisor can give you a much clearer picture of your best options from across the whole mortgage market, which is likely to be more lucrative for you than relying on the figure that a particular lender has provided, however sophisticated its calculator tool.

You can find a mortgage calculator with offset and extra repayments fairly easily through many of the major lenders, or through certain personal finance sites

Speak to an expert on offset mortgages today!

If you’ve run the numbers and think that offsetting your mortgage could be a great way to make your savings work harder for you, the next step is to speak to a specialist advisor on offset mortgages who can answer any remaining questions you may have and scour the whole market to find the best product for you and your family.

To speak to a specialist for the right advice, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances.  – We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.


Updated: 8th December 2020
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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

Find out more about Offset Mortgages

Offset Mortgages