Offset Mortgages
What is an offset mortgage?
Offset mortgages, use your savings in tandem with the mortgage to pay off your mortgage more quickly. For example, your mortgage is £150,000 and you have £50,000 of savings, so you only pay interest on the difference. In this case £100,000, not £150,000. Interest is usually calculated daily and your savings work as an overpayment, so you can effectively pay off your mortgage quicker.
Requirements.
Lenders will usually require you to open a savings or current account, along side the mortgage account. These accounts will work as a normal savings or current account however you will have the ability to view your mortgage and bank statements as one single statement.
Advantages.
With current account mortgages, you can effectively overpay by adding in additional savings, thus reducing the debt balance and interest payable. Additionally you can transfer other forms of debt like credit cards and personal loans across. By doing this you will pay the same rate of interest which could be significantly lower, for all you financial commitment. All your commitments can then be viewed one statement which can be a lot easier to manage.
Disadvantages
You'll pay a premium for having the flexibility and features that an offset mortgage offers. And unless you've got significant savings and will be able to make regular deposits then your probably best off going for a cheaper alternative.
At North Mortgages our Mortgage Experts will take care of everything on your behalf. Remember, we source mortgages from the whole of the market, so you know your getting the best deals available and all tailored to suit your personal circumstances.
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