Offset Mortgages

Offset Mortgages

Offset mortgages the latest addition to the mortage product types in the UK mortgage market.

Offset mortgages have gained in sophistication since their launch.

Offset mortgages - a new kind of mortgage launched seven years ago, this means the interest on your mortgage is "offset" by the money in your current and savings account. The mortgage allows the lender to consider your savings when calculating your monthly repayments. Offset mortgages combine your mortgage and salary and savings if you want into one account. This enables your money to work much more intelligently by reducing your overall mortgage balance. An offset mortgage can help you pay off your mortgage earlier and save money in the long term and enable you to get better returns on savings.

By combining your mortgage, current account, savings, loans and credit cards, the offset mortgages can reduce the overall amount of interest you pay on your borrowing. By paying your income and savings into one account you are reducing your mortgage balance month on month, this means you pay interest only on the lower amount. This could save youmoney over time and help reduce the lifetime off your mortgage.

Mortgages are now available for any circumstances

The more funds you have in your savings account, the less the interest payment will be on your mortgage.

There are two ways to benefit from this mortgage

Reducing the interest on your mortgage repayments
This scenario is typical of such a mortgage- you have........

• £100,000 repayment mortgage, at a 6%
• £1,000 in your current account during the month on average at 2%.
• £10,000 in savings account earning 4%.
  
  This means that you will pay no interest at all on the first £11,000 of your mortgage, rather than earning interest on your current account and savings. this enables you to make overpayments, further offsetting your mortgage.

Increase the interest on your savings and current account

• By linking your mortgage to your savings you can benefit from the lower interest rate of your mortgage, this is useful if you have cash set aside, which you want to be able to access quickly

Helping you to repay your mortgage cheaper and in a shorter time is a long term strategy, and compensates for the fact that you don't receive any interest on your savings and current accounts. If no savings are to be made because of low interest rates your two accounts can help to reduce your monthly repayments regardless of the current interest rate.

Another advantage is "consolidation", by combining all your financial activities like credit cards or personal loans you can pay of the debt at the lower mortgage rate rather than the rate set by the original finance agreement, and best of all because they are no longer secured borrowings your home it is not a risk.

Of course consolidating your debt into your offset mortgage does mean you will have longer term debt than you had originally although this may save you money in the long term.

Other types of mortgage

Cash-back mortgage
Flexible mortgage
Current account mortgage
Self Cert Mortgage
Buy-to-Let Mortgage
Adverse Credit Mortgage
First Time Buyer Mortgage

Overseas Mortgages

Spanish Mortgages
Florida Mortgages
Overseas Mortgages