As an example of how an offset mortgage would work, if a borrower has a mortgage of £230,000 pounds, with a further £80,000 saved up. They could effectively only pay interest on £150,000 of their mortgage, the reduced interest rates allowing them to save a substantial amount of money.
Although this type of mortgage may be highly beneficial for many people, it is also important to remember that the interest rates on offset mortgages are generally significantly higher than many other types of mortgage.
It is therefore important for customers to ensure that they will have enough money saved to make the loan financially viable in the long term.
When using an offset mortgage, it is also important to remember that no interest will be earned on any money that has been set aside. So it is therefore important to consider whether or not these reduced interest costs will be viable when compared against the interest the borrower would otherwise earn in competitive savings account.
Find the right offset mortgage deal and interest rates right now by using the product comparison table above.