Buy to Let Offset Mortgage

Can you have multiple savings accounts for your Buy to Let offset mortgage?

Yes, many lenders allow multiple linked savings accounts, which can be helpful if you want to separate your funds. You might want to separate maintenance reserves, your tax or your future property deposits – so this can be a helpful way to do that.

What are the pros and cons of a Buy to Let offset mortgage?

The main advantage is you’ll be paying less interest over your mortgage term. You can also keep access to your savings – so your funds remain liquid. There’s no tax on the interest earned, as you’re technically not earning it, and it is flexible for landlords with variable income or cash reserves.

The disadvantages include limited lender choice, and the products are more niche. You may be looking at higher rates because of that. Also, the savings aren’t building up any interest – so you’re not making anything on them.

The offset benefit only works while savings remain in your account. So you can’t use those savings for anything else if you want to benefit from the offset arrangement.

Are there any alternatives to Buy to Let offset mortgages?

Yes, and it all depends on your goals. A standard Buy to Let mortgage is always great. It’s simple, you often have a lower rate, and you can make overpayments within the product. That’s really good to have.

If you’ve got equity in your property, you may look to release equity – and that may be a better option than an offset mortgage. Instead of offsetting against your savings, you can just make that payment and bring down the mortgage amount.

You could also consider a limited company Buy to Let you’re looking for more tax-efficient routes for the mortgage.

How do I apply for a Buy to Let offset mortgage? What’s the process if this is the first time someone’s looking into this?

I would suggest an initial chat with a broker to assess your goals, your rental yields and your cash position. We would do an affordability check and source the right lender.

Offset mortgage products are quite niche, so it’s important to find a suitable option. Once you have found the right product it’s the standard process to get a mortgage: application, valuation and then you will hopefully get the mortgage through.

What else do we need to know about a Buy to Let offset mortgage?

Offset mortgages aren’t for everyone, but they can definitely be beneficial. Speak to a broker to find the right people in the market and see if it could work for you. While an offset mortgage is great, there are also other options that may suit your goals.

Key Takeaways:

• Buy to Let offset mortgages are rare in the UK, though some lenders offer them.
• These mortgages are linked to your savings account, and the amount saved depends on your mortgage balance, offset savings, interest rate, and how long savings remain in the account.
• Eligibility generally requires property ownership, a good rental income history, and a decent amount in the linked savings account. Age and property valuation also play a role.
• Advantages include paying less interest over the mortgage term, maintaining access to savings, no tax on the ‘earned’ interest, and flexibility for landlords with variable income.
• Disadvantages include limited lender choice, potentially higher rates, and savings not earning interest. Alternatives like standard Buy to Let mortgages, releasing equity, or limited company Buy to Let options are available.
  
  

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.

THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST BUY TO LET MORTGAGES.

For specialist tax advice, please refer to an accountant or tax specialist.