Offset Buy-to-Let Mortgages

Getting an offset mortgage to purchase a buy-to-let property can be tricky as few lenders offer this type of product. However, it’s not impossible with the right advice. Read on to find out how using a mortgage broker could help you to secure the offset buy-to-let mortgage that suits your needs.

Can you get a buy-to-let offset mortgage?

It is possible to get a buy-to-let offset mortgage, but there are very few lenders that offer them. As it’s quite a niche mortgage type, you would usually need to secure one through a specialist lender. This will also likely involve using an intermediary such as ourselves, as offset buy-to-let mortgages are often unavailable to the general public.

There can be some additional restrictions for buy-to-let borrowers looking for an offset product; for example, some lenders only allow individual landlords, not limited company buy-to-let landlords, to apply.

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Lending criteria

Buy-to-let offset mortgage criteria are typically the same as any other buy-to-let mortgage application, but you may need to consider the following in addition:

• The LTV (loan-to-value) may be reduced for an offset mortgage, and given that buy-to-let deposit requirements are already high, this could mean that you need at least 25-30% deposit, depending on the individual lender, the rental property, and your own circumstances

• You’ll need a bank account with the bank or building society providing the mortgage. Some lenders allow both current and savings accounts to be linked to the mortgage, whereas others only allow savings accounts

• You may need to deposit a minimum balance into the savings account in order to qualify, although this varies by lender

How affordability and repayments are calculated

When you use your savings to offset mortgage interest, the balance of your savings account(s) (or savings and current accounts where applicable) will be combined and used to reduce the interest due on your mortgage balance as follows:

• You borrow a £150,000 to purchase an investment property

• Your linked offset account(s) have a combined balance of £50,000

• You only pay interest on £100,000 worth of your mortgage loan balance

Top tip: You can use our calculator below to figure how much an offset buy-to-let mortgage could save you on interest, and reduce your monthly repayments. As most Buy-to-Let mortgages are interest-only, be sure to select this option on the calculator, as offset interest savings are used differently on capital repayment mortgages. 

Calculator

Offset Buy-to-Let Mortgage Calculator

Compare what your mortgage repayments would look like with a savings offset versus a standard mortgage. See how much interest you could save by offsetting your savings against your loan.

Mortgage Amount*

£

Mortgage Term

years

Interest Rate

%

Initial Offset Savings

£

Mortgage Type

Repayment Interest Only

Monthly Savings

£

Index-link your monthly savings?

Yes Savings increase each year with inflation No

Annual Growth Rate

%

Calculate

Interest saved with offset:

With Offset

Monthly Payment

Total Interest

Total Repayable

Standard Mortgage

Monthly Payment

Total Interest

Total Repayable

Savings Summary

Effective Balance (After Offset)

Total Interest Saving

Chart Year-by-Year

Mortgage Balance Savings Balance

Year	Mortgage	Savings	Effective Balance

With an offset mortgage, your savings remain accessible - you don't use them to pay off the mortgage, they simply reduce the balance that interest is charged on.

How this is calculated

How offset mortgages work: Your savings are held in an account linked to your mortgage. Interest is only charged on the difference between your mortgage balance and your savings. For example, a £200,000 mortgage with £30,000 in savings means you only pay interest on £170,000.

Monthly savings: Regular contributions to your offset savings increase the offset balance over time, further reducing the interest charged on your mortgage. For repayment mortgages, this means more of each payment goes towards principal, clearing the mortgage sooner.

Standard comparison: The standard mortgage calculation uses the full loan amount to calculate interest, giving you a clear picture of how much the offset saves you.

These figures are estimates. Your actual savings will depend on your lender's specific offset mortgage terms and conditions.

Recalculate

Your Offset Mortgage Summary

mortgage at with offset savings

Interest Saving

	With Offset	Standard
Monthly Payment
Total Interest
Total Repayable

Estimates only. Always check your mortgage terms. www.moneyhelpdesk.com

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A mortgage broker can compare offset mortgage deals from across the market to find the best option for your circumstances.

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Which lenders are available?

Buy-to-let offset mortgage providers are fairly hard to come by, as many lenders only offer this type of product to residential customers. However, it’s not impossible, and there are lenders out there. A mortgage broker specialising in buy-to-let mortgages will be best placed to help you secure an offset buy-to-let mortgage suited to your needs.

Lenders who have offered this type of mortgage in the past, subject to product availability, include Clydesdale Bank and Family Building Society.

Will the interest rates be higher?

Buy-to-let offset mortgage rates tend to be higher than rates on other investment mortgage products, as there are potentially large interest savings to be made over the lifetime of the mortgage. They can also vary depending on whether you take an interest-only or capital repayment style of mortgage repayments, as well as based on the LTV of your loan.

As well as the interest rates, it’s also important to consider any fees attached to the mortgage when comparing offset mortgages with non-offset options. A broker with experience in this area of the mortgage market can help with this. 

Compare current offset mortgage rates

Our free comparison tool is set to show purely buy-to-let offset mortgage products to help you compare with ease, however, keep in mind that due to the small number of lenders offering this type of product results may be limited. You can use the additional filters to show all mortgage lenders and types if you prefer. 

Why choose Money Helpdesk for your offset BTL mortgage?

To find the best offset buy-to-let mortgage, it’s a good idea to seek advice from a mortgage broker with specific experience in sourcing this type of product. This is a niche area of lending, so finding the right product can be challenging without expert knowledge.

At Money Helpdesk, we have helped lots of landlords to secure the right type of mortgage for their needs and circumstances. Other customers chose use because:

• We know the niche well and have plenty of experience offering all kinds of investment mortgages

• We have access to the entire market, including specialist lenders who may offer unique deals

• Your initial consultation is always free of charge, and there is no obligation

• We are 5-star rated on leading review websites

So get started today, organise a chat with our buy-to-let mortgage experts