Offset mortgage

[Loandbehold2026]

Fixed rate mortgage ending next year. Since purchasing the house, my husband has inherited some money. We have both agreed that this is likely to be needed for child with SEN, but saw the idea of an offset mortgage. I am drawn to it as it means the money is still separate and can be used when needed (I realise this would affect the repayment amounts if we did this). We have never been in the position of having savings so don’t want to mess it up. The inheritance is the same amount as our outstanding mortgage, although not sure we would put it all up, more likely to be 50-75%. Would an offset mortgage be appropriate? We will approach a mortgage advisor soon but would appreciate any thoughts. Thank you!

Possibly. We have one because DH is a contractor.

Ours is a variable rate, which I think is the norm.

Our mortgage has been paid off now, so not sure about current rates etc, but we always had an offset mortgage. We were (at the time) earning enough to regularly add to savings which refused the interest amount of the mortgage, which meant we were able to pay off the balance much quicker. At the same time we knew that if we needed money for an urgent expensive repairs it was immediately accessible.

Thank you both - other than not receiving interest on the savings are there any downsides? I know the most logical way to sort this would be to pay off the mortgage entirely but we are really concerned about only being able to release funds once we sell.

It's worked well for us. We're fully offset now but we've kept it as DH is the higher earner and we won't be retiring any time soon. It feels safer to have the obvious financial cushion.

Thank you very much indeed

We had one 15 years ago. The principle was fully offset, but we paid the full monthly amount off. It made a HUGE difference and brought down the amount we needed for our next house.

You might also consider that although you don't 'receive' interest on the lump sum, if that amount was in a regular high interest savings account, you would be paying tax on the interest, depending on whether you're a basic or higher rate tax payer. So it might actually be more efficient to use the offset reservoir.

Thank you - yes exactly my thoughts too - I think it seems so perfect that my brain is stopping me as I was paranoid there were drawbacks that I hadn’t considered! Thank you so much for taking the time to respond. It’s such a big decision and the additional responsibility of it being an inheritance means I have been quite worried about it all

The only issue is finding a good one - I’m keen to do that (although we only have a few years left) and haven’t been able to find many in the market but maybe that’s because we don’t have much left to pay off.

Personally I thought it was great. I had a reasonable amount of savings so was able to put that in the offset. It was very satisfying seeing my lump balance go down quicker. And as a result I paid off my mortgage early !

We had one until we paid off our mortgage. Probably the best financial decision I have made.

Thank you all - you have all reassured me

Ours is with Barclays btw.

Often the rate is higher than standard rates so you might be better off self offsetting by taking out a cheaper standard mortgage, making the most of ISAs and personal savings allowance. Also investing most of the money instead and getting it into S&S ISAs over the next few years as it should grow faster than a typical 4/5% mortgage interest rate.