Needs for offset mortgages have dropped since the 1990s, although they’re still a great option for customers who are able to put something aside each month. They’re also good if you think you may receive a lump sum soon.
When you take out an offset mortgage, the lender will give you a savings account to go along with it, solely for the purpose of the mortgage. Rather than attracting interest, the money offsets against your mortgage balance. For example, if your mortgage is worth £100,000 and you have £18,000 in savings, then you pay interest on the remaining £82,000.
It’s a smart move if you are due a lump sum for any reason, such as future inheritance, as you can store your money until you are ready to decide what to do with it due to it being interest-free. This can apply to any annual or quarterly bonuses from your job that you don’t rely on.
An offset is an excellent opportunity for First Time Buyers who want to overpay on their mortgage. Overpaying can reduce your mortgage payments for your next term, leading to a reduction on your interest rates too, with other mortgage types, the money you put in cannot be taken out again until the end of your term, which can be less than ideal if you change your mind or need to take some of it out early.
This is where Offsets are handy, you have a savings account, you can take out the funds at any time, then put them back in when you’re ready. So, if you’re looking to make additional payments on your mortgage over time, we’d highly recommend taking advantage of the Offset savings account as you go.
Make sure to consider all your options when speaking to a Mortgage Advisor in Leeds. Some consumers who like Offset Mortgages tend to keep these types of mortgages going and therefore, don’t tend to remortgage. Your advisor should be able to show you the impact of how an Offset can save you money over the course of the full term.
If you have any questions or require any help regarding Offset Mortgages or wanting to Remortgage, then get in touch with one of our friendly Mortgage Advisors in Leeds, and we will be happy to help discuss the topic further.