Case snapshot
- Facility
- Offset mortgage, variable, 5-year product
- Loan amount
- £9,000,000
- Loan-to-value
- 70%
- Rate
- 1.21% above the bank's base rate
- Early repayment charges
- None
- Timescale
- 5 weeks
Background
In this instance P10 were mandated by an existing client to assist them with the best mortgage structure to acquire a second home in London. We were able to deliver the mortgage in 5 weeks from start to finish which allowed our client to exchange swiftly on their purchase.
The mortgage was structured through a private bank, which allowed us to use a personalised underwriting approach to the clients complex income situation. We delivered an offset mortgage that supports the clients financial circumstances and allows them to enjoy the liquidity an offset facility provides.
How the Offset Mortgage Works
An offset mortgage links your cash savings held with the private bank directly to your mortgage balance. Rather than earning interest on your savings, those funds reduce the amount of mortgage debt on which interest is calculated.
For example, if you hold £9m in cash savings with the bank, your entire mortgage balance is effectively offset — meaning you would pay zero interest. Conversely, if you hold £4,500,000 in savings, interest is only charged on the remaining £4,500,000 of the mortgage.
| Savings Held (£) | Effective Mortgage Balance (£) | Monthly Interest Saving |
|---|---|---|
| £9,000,000 | £0 | £40,200 (full saving) |
| £4,500,000 | £4,500,000 | £20,100 |
| £2,000,000 | £7,000,000 | £8,934 |
| £0 | £9,000,000 | £0 (full payment applies) |
