The idea behind an offset mortgage is that your savings account and your mortgage are both combined into the same account. This means that any savings you have can go towards temporary overpayments towards the repayment of your debt.
The main benefit is that you will still have access to your savings so you can spend them if you need to. This is very different from when you make conventional overpayments on your mortgage as the money you pay to your lender can never be returned to you.
Should I investigate an offset mortgage?
Investigating an offset mortgage with a mortgage broker, like ourselves, is always a good idea. We have noticed over the years, that offset mortgages tend to have higher interest rates than those attached to conventional mortgages. However, with the right amount of savings, you should see a large saving in money at the end.
By talking to us, we can work out for you whether or not it’s the right move to take out an offset mortgage. It really depends on the size of your savings and how much you regularly deposit as well as the size of your mortgage in the first place.
What level of savings would I see?
The savings that are made are usually linked to interest. So, for instance, the savings you would make on interest would generally be greater than the interest you would earn if you left your money in a savings account.
If you have a mortgage worth £150,000 and have £20,000 in a savings account, your savings offset against the mortgage value would mean you would only be paying interest on the £130,000 difference.
If you are currently looking for a mortgage and would like to discuss the above in more detail then please get in touch.
*Please note: Your home maybe repossessed if you do not keep up repayment on your mortgage.