Offset & Current Account Mortgages

Offset & Current Mortgages are a speciality of the Mortgage Specialist. There are so many benefits that a client can have to an offset mortgage.

Offsets your savings and current account balance against the cost of your Loan, thereby reducing the level of interest you have to pay and potentially cutting down the repayment period for the loan. Offset mortgages were once the preserve of the rich, but having the ability to offset savings against your mortgage loan could now benefit many homeowners. We believe that a of mortgage borrowers could be in a better financial position should they choose to  remortgage to an mortgage offset deal.

Advantages

  • Reduce the level of interest you pay on your mortgage
    • - the more savings you have to offset your borrowings the less interest rate apply to your mortgage.
  • Shorter mortgage term
    • - the more savings you have to offset your borrowings the less your repayment terms left.
  • Flexibility
    • - can overpay and underpay without penalties.
  • Payment holidays
    • - not pay anything for a period of time.
  • Accessible money
    • - Can drawdown on funds with a ‘Reserve Facility’ – avoid the hassle of remortgaging.
  • Tax efficient
    • - by putting your savings against your mortgage, the interest that you have saved on your mortgage is tax free.
  • Use Other People’s Money To Make You
    • - we advise and educate our clients how to make the most of the financial tools available to them.

Disadvantages

  • Rates - The rates on such products can be expensive especially if the account is not used to its full potential.  Such product may not be suitable for every borrower.
    •  

An example of the benefits of an offset mortgage

Let's say your £10,000 in savings attracts a 6% annual interest rate. At the end of one year you will have gained £600 in interest on which you will have to pay £240 to the taxman (if you're a higher rate taxpayer) or £120 (if you pay at the basic rate). So, depending on your tax rate you will end the year having gained either £360 or £480 on your £10,000.

But, let's say your £10,000 is being offset against your mortgage which charges 6%. Because you're not being paid any interest on that money you obviously won't have to pay any tax on it. What you will have done instead is saved yourself £600 in mortgage interest effectively enabling you to pay down your mortgage more quickly. This is just the tip of the iceburg…

Those who are higher rate tax payers, self employed individuals or have a significant amount of savings could potentially benefit from having an offset mortgage.

 There will be a fee for arranging the mortgage. The precise amount will depend upon your circumstances, but we estimate it will be £395.

For further assistance, call us on 0800 612 7688.