Offset Mortgages – How it Works
Depending on the amount of money that can be dedicated to an offset mortgage, customers can essentially use their savings to offset the cost of their interest repayments. Unlike many other mortgages wherein a customer will be expected to repay a fixed amount of interest each term, the rates for these mortgages can be dramatically reduced in this way.
So if for example a borrower with a mortgage of £250,000 commits £120,000 worth of savings to their offset mortgage, they would only be expected to pay interest on £130,000, saving them a significant amount of money.
It is also worth remembering that this money is usually still fully accessible, although withdrawing it may significantly increase the customer’s interest rates, and it should therefore be managed carefully.