Offset mortgages explained
Making your money work harder for you
If you compare savings rates to mortgage rates you will invariably notice that mortgage rates are higher that savings rates.
This is not unusual and is essential to the survival of financial institutions, particularly building societies who use
depositers money to lend out to borrowers.
An offset mortgage enables you to take advantage of this by allowing you to offset any savings you have
against your mortgage. So, lets say you have £100,000 mortgage and £10,000 savings. You would only be paying interest
on £90,000 effectively earning the mortgage rate on your £10000 savings.
Tax efficiency
Interest earned on your savings is liable to tax at your marginal rate. But, if you use your savings to
offset your mortgage there is no tax liability. This is quite a boost, particularly if you are a higher rate tax payer.
Flexibility
Many offset mortgage providers offer considerable flexibility to overpayments and, providing you have sufficient
funds in your savings to cover any future payments, underpayments or payment holdays. You will also have full access
to your savings.
YOUR HOME MAYBE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE