Offset mortgages and overdraft facilities are often associated with niche corners of the lending market, and for good reason. For landlords seeking loans under £1 million, especially through high street lenders, these structures are essentially unavailable. The mainstream market simply doesn’t offer them.
However, step into the private bank lending arena, and the picture changes entirely. For high-value landlords and portfolio investors, particularly those borrowing in the millions, private banks can structure borrowing in ways that deliver liquidity, efficiency, and strategic control.
At this level, the two most powerful tools are:
- True Offset Mortgages – Your deposit or savings are linked directly to the loan balance, reducing the amount on which interest is charged. You retain full access to the funds, which are not treated as repayments.
- Overdraft Facilities – The bank approves a larger overall facility, but you only pay interest on the portion you draw. This gives you the ability to stage your borrowing to match investment or development timelines.
These are exclusive to private banking relationships and are structured to fit around the borrower’s portfolio and investment plans, not the other way around.
Why High Street Lenders Don’t Offer Offset Mortgages and Overdraft Facilities
Mainstream buy-to-let lenders focus on standardised, fixed-term or variable rate mortgages. Their systems and affordability models are built for simplicity, not flexibility. This means:
- No ability to link multiple savings accounts to reduce interest.
- No access to overdraft-style lines of credit for phased deployment.
- No willingness to offset across multiple legal entities, SPVs, or LLPs.
Even in the rare cases where a high street lender offers an “offset” product, it is almost always restricted to residential owner-occupied borrowing, with strict limits on loan size, ownership type, and account linking. For professional landlords managing multi-million-pound portfolios, these high street options simply do not fit.
Why Private Bank Facilities Stand Out
Private banks take a fundamentally different approach. They assess the borrower’s total asset base, cashflow profile, and long-term plans before designing a facility. This allows for:
- Cross-Entity Offset – Link SPV, LLP, or personal deposit accounts to the same facility.
- Large-Scale Flexibility – Borrow £1m, £5m, or £20m with terms tailored to the portfolio’s structure.
- Capital Efficiency – Keep cash reserves working to reduce interest costs while retaining immediate access.
- Custom Repayment Schedules – Structure overdrafts and repayments to match acquisition timelines, refurbishments, or planned disposals.
- Tax Efficiency – Interest saved through offsetting is not taxable, making the net benefit often superior to traditional deposit returns, particularly for higher and additional rate taxpayers.
Strategic Uses for Portfolio Landlords
For landlords with significant capital reserves, these facilities offer strategic advantages far beyond a competitive rate:
- Bridging Between Acquisitions
Retain liquidity for your next purchase while reducing interest costs in the interim.
- Maximising Retained Profits
Keep SPV or LLP earnings offsetting the mortgage until the next investment opportunity.
- Managing Irregular Income
Ideal for landlords reliant on seasonal income, profit shares, or dividend flows, smoothing cashflow without overcommitting.
- Reducing Development Holding Costs
For refurbishment or ground-up projects, draw down in phases and only pay interest on what’s been used.
- Sheltering Capital from Taxable Interest
For higher-rate taxpayers, the effective yield from interest savings can exceed that of any taxed deposit account.
A Practical Example
A portfolio landlord with a £4 million facility at a private bank may hold £1.5 million in liquid capital across personal and corporate accounts. By linking these to the loan in a true offset structure:
- Interest is only charged on £2.5 million, not the full £4 million.
- The £1.5 million remains fully accessible for acquisitions, refurbishments, or unexpected opportunities.
- If the landlord decides to proceed with a purchase, funds can be released immediately without refinancing or breaking fixed terms.
The Bottom Line
If you are looking for a sub-£1m buy-to-let mortgage, offset or overdraft facilities of this kind are effectively off the table. They are a private banking tool, designed for landlords with large, complex portfolios and substantial liquid assets.
Where high street lenders require you to fit their products, private banks build the facility to fit you. This means your capital can work in multiple ways, reducing costs today while staying ready for tomorrow’s opportunities.
At Henry Dannell, we work closely with private banks to secure these facilities for clients with the right profile. If you are holding significant capital and want it to actively reduce borrowing costs without tying your hands, a tailored private bank offset or overdraft structure could transform the way your portfolio finances operate.
Please note: A mortgage is secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. Mortgage deals may not be available, and lending is subject to individual circumstances and status.
