Offset mortgages allow you to link a current and/or savings accounts to your mortgage. The value of your savings is then subtracted from the amount you pay interest on to reduce your monthly payments and less overall interest charged. Offset home loans will not earn interest on your savings, however as people usually pay more interest on a mortgage than they earn from a savings account, this type of mortgage could still save you money.
Over a full mortgage term, offset mortgage rates could save you large sums in mortgage interest payments. Usually your capital repayments will still be based on the full loan amount as the offset arrangement only reduces the amount you are required to pay interest on and not the loan itself which must still be repaid in full, however in some instances a reduced payment could be taken instead.
Below you will find some more common features which may come with an offset rate mortgage:
- Interest Calculated Daily
- Payment Holidays
- Flexible Mortgage Savings Account
Offset Mortgage Rates
Offset mortgage repayments do not affect the actual value of your savings, as they are placed in an interest-free savings account and their value is then offset against your mortgage. You can still withdraw money from your savings with an offset account, however if you do then you will no benefit from the same amount of ‘offsetting’.
Although this scheme has its benefits it can be complicated and difficult to keep track of your full payment schedule. So, you should carefully consider whether it is suitable for you before taking out an offset mortgage.
Currently Offset mortgages are available with different rate types:
- Offset Repayment Mortgages
- Flexible Offset Variable Rate Mortgages
- Flexible Offset Fixed Rate Mortgages
- Flexible Offset Tracker Mortgages
If you would like to find out more information concerning flexible offset mortgages, get in touch with us here at Stuart Brown Mortgage Services to speak to one of our mortgage brokers.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up the repayments on your mortgage.
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