4.97 out of 5 based on 2,400+ reviews
4.97 out of 5 based on 2,400+ reviews
Borrowers can make their savings work harder by offsetting them against their mortgage.
Rated 4.97 out of 5 from 2,400+ reviews
offset mortgages
With an offset mortgage, the balance of the savings held within your offset account is offset against your outstanding mortgage debt, reducing the amount of interest you pay on the mortgage.
This will enable you to clear your mortgage more quickly and pay less interest in the long run, while retaining access to your savings in case of emergency. With most offset accounts you can choose to either have smaller monthly payments or a shorter overall term.
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suitability
Offset mortgages are rarely promoted but offer concrete advantages that are worth checking out.
Substantial Savings
Offset mortgages are suitable for people who have substantial savings. Those savings will not earn you interest if you offset them, but they will save you from paying interest at the mortgage rate, which is generally higher than the savings rate after tax. For higher-rate taxpayers, offsetting against a mortgage can prove particularly efficient.
Large Annual Bonuses
They are also of interest to individuals who have large annual bonuses as this can form part of an overall repayment strategy towards an interest-only mortgage.
Self-Employed Clients
Offset mortgages are particularly appealing for self-employed clients who often save their taxes throughout the year and then pay their tax bill in January. The tax they are saving throughout the year can be used to offset their mortgage, thereby reducing their monthly mortgage payments or term of the mortgage.
Offset mortgages offer several advantages that can make them an attractive option for certain borrowers.
things to consider
While offset mortgages offer several advantages, it’s important to consider their potential disadvantages before deciding if they are the right option for you.
Not all lenders offer offset mortgages, which means your choice of lenders may be more limited.
A mortgage specialist can help source the right offset mortgage for you. Your Private Finance consultant will explain offset mortgages in full to help you make an informed decision whether offset is right for you.
Please be aware that Private Finance is not a tax advisor, and this page does not constitute tax advice. Your home may be repossessed if you do not keep up repayments on your mortgage
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