Offset Mortgages | Are They A Wise Choice For You?
An offset mortgage is a fully flexible mortgage which allows a borrower to keep balances (such as mortgage debt, savings account and current account) in separate accounts, but, for the purposes of interest calculation, all balances are aggregated.
Money in savings or current accounts is set against the mortgage balance and interest is only charged on the outstanding amount, meaning interest payments are lowered or depending on the lender the term of your mortgage reduced.
How they work
The principle is simple: some mortgage borrowers also have savings, even if they are small, and using this money to cancel out mortgage debt makes sense. By utilising your savings to offset your mortgage payments you avoid paying tax on interest that savings deposits would normally attract. Additionally, because offset mortgage lenders calculate interest daily, every pound in your deposit account works hard to reduce the cost of borrowing.
Flexible mortgages come in many guises, but in many cases allow you to make extra lump sum or monthly payments, borrow back money, take payment holidays and make underpayments.
Will You Benefit From An Offset Mortgage?
Offset & Flexible mortgages suit certain type of mortgage clients but they can often come attached with slightly higher interest rates or fees so it is essential to compare the scheme against a mainstream discounted or fixed product to ensure the benefits and savings really do work for you.
With more and more lenders operating in the offset and flexible mortgage market, all offering different 'quirks' on their products in competition with the each other it is crucial that a comprehensive comparison is made. With instant access to a whole of market panel of lenders the Mortgage Broker can compare lender products at the touch of a button thereby ensuring that you are getting the best deal available to suit your individual circumstances.
Our professional advice, quotations and mortgage illustrations are completely free so you have nothing to lose and much to gain by contacting us to find out what we have to offer.
"As a first time buyer I was overwhelmed and a little confused with all the mortgage products available through high street banks & building societies but after a simple, no pressure call to The Mortgage Broker, I felt more confident about choosing the right mortgage. A friendly, knowledgeable and professional service at all times, thank you."
Mr Bruno, St Neots
