Offset Mortgages

Many of our clients wishing to retain a mortgage in retirement opt for an offset mortgage. This means you can offset your savings and current account against the total amount owing on your mortgage. Foregoing interest on your savings/current account means you are not charged interest on the equivalent mortgage balance. The option of having income such as a pension paid into the linked account means that until spent the money is working effectively.

The interest savings can be used to either reduce your monthly repayments or pay off your mortgage sooner, either way it can prove very effective and save pounds in interest.

The option to retain the original mortgage balance and only pay interest on the difference between the “savings pot” and the mortgage balance can be attractive, potentially achieving a “cost neutral” mortgage meaning no actual mortgage payment is made until savings are reduced.

Of course the mortgage balance remains constant therefore this option needs to be carefully considered to ensure it fits with your overall financial strategy.

	Offset mortgages help you to cut years off your mortgage potentially saving you thousands of pounds, or reduce your monthly repayments
Step 1 :	Your current account and savings account balances combine
Step 2 :	The total amount is then offset against your outstanding mortgage balance
Step 3 :	Interest is only charged on the remaining amount
Step 4 :	By reducing the interest payable, on these figures you could pay off your mortgage 10 years and 8 months earlier saving £89,000 interest*
	* Assuming savings and current account balance remain at the same level throughout the mortgage term, and no further borrowings are made; and assuming the mortgage is repaid when the mortgage and savings balances are equal. Based on a repayment mortgage with an original term of 25 years and a mortgage interest rate of 5.79%