Offset Mortgages How It Works

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1.32%Reverts to 3.75% after 2 years
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Overall Cost for Comparison 3.50% APRC. This is the cost of the mortgage over the full term. Early redemption charges may apply.

An offset mortgage may be highly beneficial for customers in the right circumstances, however, many people are often understandably confused about exactly how offset mortgages work. In any case when searching for an appropriate mortgage, it is important to compare mortgages by researching the market as much as possible for different offers. Although the process can be confusing, hopefully this information may help clear up exactly how it works. Offset mortgages are handled in a very similar way to many other types of mortgage agreement, and may be a highly beneficial for people who have a significant amount of savings to commit to their mortgage.

 

Before considering an offset mortgage however, potential borrowers should first consider what method of repayment they will be best suited to. Depending on their financial situation, customers can either select an interest only agreement or a repayment mortgage.

 

For more information on mortgage deals from providers, please use the FREE mortgage calulator below to help you compare over 5,000 mortgage deals instantly:

 

About you
Your income
Partner income
Income = £95,000
This calculates your maximum loan
Your property
Property value
Your deposit
Borrow = £160,000
Your loan to value (LTV) = 51%
Your mortgage
Mortgage Type
Payment Method
Payment Term

No mortgages were found which match these requirements. Please use the search form above to find mortgages which suit your precise requirements.

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.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

The above mortgage products highlighted on this website are available directly through lenders who will be able to provide further information about the product you are interested in. If you are unsure about what mortgage product is suitable for you, we suggest you speak to an independent mortgage broker