With an Offset mortgage you can link the balance of your savings account to your mortgage.  An easy way to understand this is say if you have £30,000 in savings and had a mortgage of £150,000, then you only pay interest on £120,000.
You do not earn interest on your credit, however the interest you are charged on your mortgage is less enabling you to pay off your mortgage early or make big savings.

With an offset mortgage, your mortgage lender allows you to link the balance of you mortgage and any other borrowing – like loans or credit cards – to the money you have in your savings accounts, offsetting the debt so you only pay interest on the difference. 

For example, if you have a mortgage of £150,000, and savings of £20,000, you only pay interest on £130,000. You do not earn interest on your credit, but the interest you are charged is less, so you could make big savings or even pay off your mortgage early.

The best Offset mortgage deals usually have a flexible element and include features such as

Making Overpayments
Payment Holiday
Additional borrowing facility

Offset mortgages can be tax efficient as every penny you have in savings or current account can be used to help pay off your mortgage earlier.  So rather than earning interest that is taxable, by putting your savings towards your mortgage, there is no tax to pay.