A more complex mortgage arrangement, an Offset Mortgage is especially advantageous for higher rate tax payers with a lump sum of money available to invest.
The mortgage lender can offset your mortgage balance against any savings or deposits you have with them. You can usually opt to pay no interest on part of your mortgage, equal to the value of your savings (on which you’ll receive no interest). This means you could reduce the term of the loan (saving you interest) or you could reduce your monthly payment.
This can be a more tax-efficient way of saving, especially for higher-rate tax payers, as the mortgage interest saved is usually higher than the interest rate earned after tax on your savings.
IMPORTANT NOTE: Your home may be repossessed if you do not keep up repayments on your mortgage.