If for example, a customers has £40’000 of savings to put towards their mortgage of £200’000, a northern rock offset mortgage may allow them to reduce their interest repayments by a considerable amount.
However, it is also important to remember that withdrawing money from these linked account may dramatically increase the cost of interest repayments, depending on the circumstances.
Although any capital that is used in a linked account will not gain interest, customers will not be expected to pay any income tax on these savings, which could save them a significant amount of money in the right circumstances.
There are also several variations of offset mortgages that be of use to customers, such as:
- A tracker offset mortgage
- A variable offset mortgage
- A fixed rate offset mortgage