Offset Mortgages

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Offset Mortgages are a relatively new concept. In short an offset Mortgage is a Mortgage account linked to a Bank or Savings account.

The easiest way to explain would be, with a conventional Mortgage, if your Mortgage Balance is £100,000 you would pay interest on the balance of £100,000. With an offset Mortgage if your Mortgage balance is £100,000 but you have £20,000 in a linked savings account, you would only pay interest on £80,000.

The pros of Offset Mortgages:
If you are able to put money into the savings account, you are paying interest on a smaller amount.
The money is flexible, if you need the money for something else you can usually withdraw it from the account immediately.

The cons of Offset Mortgages:
The big one, a 2 year fixed offset Mortgage will usually be a higher interest rate than a conventional equivelant Mortgage.
The pool of lenders available is much smaller. If you have a complicated set of circumstances you may find it is difficult to obtain one.

Offset Mortgages can be quite good and we are big fans of them, however they are generally only financially viabe in certain circumstances and so it is worth considering the overall costs as you need to ensure you will make use of them for it to worthwhile.

To discuss Offset Mortgages or anything else, please do get in touch.