Offset Mortgages
Offset mortgage – for people with substantial savings, this type of mortgage is becoming increasingly popular. It ties your savings and current accounts and mortgage together in a flexible arrangement. The accounts are kept separate, but the amount in each is taken into consideration when the mortgage interest is calculated.
For example: your mortgage might be £200,000, but because you have £15,000 in savings, you pay interest only on £185,000: the amount you are able to save directly affects your mortgage repayments. There a many variations of the offset mortgage, but at mortgagesplease we have the experience and access to ensure that if offset is right for you, we will find the most appropriate arrangement.
Offset mortgages – pros and cons:
PROS:
- If you have plenty of savings and money in your current account, an offset mortgage can save you lots of interest.
- All your other debts are consolidated into a single loan (credits cards, store cards and personal loans, for instance), giving you a lower repayment interest rates on them all.
- Unlike a current account mortgage, you can still see your individual accounts.
- Offset mortgages are particularly popular with self-employed people, contractors or people on a bonus scheme.
CONS:
- Because the mortgage is flexible, the rate of interest is generally higher than, say, a tracker.
- You will not receive interest on your current account savings – although savings rates are low at the moment, anyway.
- Consolidating debts into a mortgage does usually mean that you will take longer to pay them off.
