Offset Mortgages

An offset mortgage is a mortgage with a savings/current account that’s linked to the mortgage account. This savings account is sometimes referred to as “offset account”. Why would you want a savings account linked to your mortgage?

Because it can reduce the amount of interest you’re charged.

With an offset mortgage, the lender deducts the savings in your linked account from the outstanding mortgage balance to give a net balance. They then charge interest on this net balance, as opposed to the total outstanding mortgage balance like they would with a normal mortgage.

You can benefit from the reduced interest charges in 2 main ways, you can either:

  • Make lower monthly payments with a payment reduction offset

  • Make the same monthly payments that you would on a normal mortgage, so that you essentially make overpayments on your mortgage and pay it off quicker, with a term reduction offset

Payment reduction offsets are available on both repayment and interest-only bases. Term reduction offsets are usually best applied to repayment mortgages.

GET YOUR SAVINGS TO WORK HARDER FOR YOU

The Financial Conduct Authority does not regulate some forms of Buy to Lets. Your property may be repossessed if you do not keep up repayments on your mortgage.

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