Offset mortgages would be a flexible type of mortgage that can be linked to a number of your bank accounts, including current and savings accounts. By forfeiting interest on credit balances, the interest you pay on your mortgage could be significantly lowered.
For example; if a customer had a mortgage of £150,000 and savings of £35,000, they would only pay interest on £115,000 of their mortgage loan.
The widely reported benefits of an offset mortgage are as follows:
An offset mortgage will usually allow you to make over- or underpayments, as well as take payment breaks or withdraw money from your account.
Savings are usually taxed, though if you link your savings to an offset mortgage, they will be tax-free.
As monthly repayments on an offset mortgage are calculated based on the whole loan, you could effectively ‘overpay’ each month – meaning that you could pay your mortgage back ahead of schedule.
Although Lloyds Bank do not offer offset mortgages, there are many other banks and building societies that do. Please see the comparison tables above for further information on some of these offset mortgage deals.