First, we must establish what an offset mortgage is? An offset mortgage would apply to customers that have a savings account with a sizeable amount of money; it then takes into consideration what your mortgage is for, once the savings is subtracted from the mortgage, the difference is then the offset mortgage, allowing the customer to pay interest on the difference only. This could save customers a pretty penny. It also entices customers to save more than they spend.
Lenders are tackling this new mortgage to encourage their customers to put their savings to good use. Offset mortgages are easily obtainable in the UK. As with any financial decisions customers must research which offset mortgage is the correct one. There are two types of offset mortgages that can help you lower your debt.
The most common type of offset mortgage is called the Current Account Mortgage. With this account, a customer’s financial accounts are all bound together. Other offset mortgages are not linked together and remain in separate accounts. The principles are still the same, whereas the more the customer invests the less it would cost.
One key element that a customer must take into consideration is the fact that interests are generally higher on these loans, but the payments become smaller due to the offset amount.
An offset mortgage is not for everybody, but is it for those with current and savings accounts, that want to be able to use money already saved towards paying off their mortgage faster. It also allows for customers to draw funds with no remortgaging. With offset mortgages becoming more and more popular than its traditional counterpart, chances are these loans will become a bit more flexible. When researching which offset mortgage is right, a customer must carefully calculate which one right.