Offset Mortgages
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Offset Mortgages
Use your savings to reduce the interest you pay with offset mortgages.
An offset mortgage is a type of mortgage linked to one of your savings accounts, and then the money in your savings account is used to lower the interest charged on your monthly repayments.
Example: If you have a £250,000 mortgage and £50,000 in your savings account, you will only pay interest on the £200,000 instead of the total £250,000.
Please note that the savings that are offset against your mortgage will not earn any interest.
What are the advantages?
- Flexibility – Your savings can still be accessed.
- Decrease the interest paid – Using your savings to offset the interest paid on your mortgage and then this will reduce your monthly repayments.
- Tax Advantages – No tax is paid on the interest savings.
What are the disadvantages?
- No interest received from your savings – This is because you are benefiting from a lower amount of interest.
- Reduced choice of lenders – Not all lenders have offset mortgage products.
- A larger deposit is usually needed – a 25% deposit is usually needed.
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