Offset Mortgages

What is an offset mortgage?

An Offset Mortgage is where your savings are deducted from your mortgage amount and you just pay interest on the balance thats left. You won't receive interest on your savings but you can still have access to them.

What are the benefits?

With this type of mortgage the more savings you have (including ISAs and Current Account) the less interest you will pay on the balance due.

This will save you a large amount in interest payments over the term of the mortgage.

How flexible is this type of mortgage?

You can also benefit from this type of mortgage by paying it off early or reducing your monthly repayments and save even more.

Interest is usually calculated daily so any amount that is credited to your savings account or current account will immediately reduce the interest payment on your mortgage.

Who is this type of mortgage aimed at?

This type of mortgage is worth considering if you are a higher rate taxpayer as you don't pay tax on the interest of your savings.

Also, if you are self employed or on short term contracts where you receive large bonuses or large amounts now and again these can be paid in and start earning interest immediately.

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This mortgage really benefits you if you have substantial savings and can earn reasonable steady amounts but before considering this option its necessary to seek professional advice to find out the best deal for you.