Offset mortgages
An offset mortgage offsets the amount in your savings and
current accounts from the interest on your mortgage.
This provides you with an opportunity to pay off your mortgage
quicker and cheaper. However, you won't receive any of the
interest on your savings account or current account.
Base rates are currently low, which means that instead of
getting small amounts of interest on your bank accounts, they work
to reduce your mortgage payments, helping you to get it paid off
sooner.
If you have other debts, including credit cards and personal
loans, etc. These can all be repaid at the mortgage rate, which
will probably be lower than the rate on those borrowings.
It is important to remember that by consolidating debts into
your offset mortgage, you are changing your short-term debt into
long-term debt, so you should ensure these are paid off sooner
rather than later, otherwise it will cost more in the long run.
Basically, you are pouring your savings into your mortgage in
order to pay it off, without sacrificing easy access to the
accounts, and the funds.
Another advantage is that credit cards and loans remain
unsecured borrowings, despite being paid off at the mortgage
rate.
Those who have large savings accounts will find offset mortgages
useful, as well as those with variable incomes, such as the self
employed.
To enquire about an offset mortgage, simply click
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