An offset mortgage involves linking a bank account – usually a savings account or current account – to your mortgage, in order to reduce (offset) the cost of monthly mortgage payments as well as reducing the time it takes to pay off the mortgage.
Linking your savings or current account in this way to your mortgage could save you thousands in mortgage interest, as well as potentially reducing your mortgage term. You can still access your savings when you need to – the good news is that these savings don’t earn interest while they are being used to reduce your mortgage balance, so you won’t need to pay any tax on them.
Compare a wide range of offset mortgage deals with other those of other leading providers use our FREE online mortgage calculator.
Although there are slight variations between providers, most offset mortgages work in a similar way.
You will usually set up an offset savings account with the mortgage provider at the same time as taking out the mortgage.
These accounts stay separate, so you can access your savings if you need to. However, you only have to pay interest on the difference between the amount in your savings and the amount of your mortgage.
This means that the more money you put into your offset savings account, the less interest you have to pay on your mortgage.
You want to retain access to your savings – an offset mortgage allows you to make use of your savings while still retaining access to them.
You are self employed – of you have an irregular income, an offset mortgage could allow you greater flexibility that some other types of mortgage.
You are a higher rate taxpayer – an offset mortgage allows you to use your savings to reduce your mortgage payments, without having to pay any income tax on the savings used.
To find the best offset mortgage deals call our mortgage team.
If you are not sure whether now is the right time to remortgage or whether you can get an interest only deal, then we can put you in touch with an independent mortgage broker who will compare offset market providing impartial advice.