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Offset Mortgages

An offset mortgage is an arrangement that gives you the potential to pay off your mortgage early. It does this by allowing you to "offset" savings against the outstanding mortgage debt.

offset mortgagesLet's say you have a £100,000 mortgage and savings of £10,000. With an offset mortagage you would, in effect, give up earning interest on the £10,000 but would, in return be charged mortgage interest on £90,000 not £100,000. Your monthly repayments would be based on a mortgage of £100,000 so, in effect, you will overpay each month. Over a typical 25 year mortgage this can save you a significant amount of money and is very tax efficient.

There are, essentially, two types of offset accounts on the market. The simplest method is achieved by keeping the mortgage and savings in separate accounts which are linked to allow the appropriate interest calculation.

The other type is a current account mortgage where the mortgage debt and the current account amount are combined. The effect is the same but you have to be mentally strong enough to deal with, what looks like, a significantly overdrawn account.

If you have spare cash which you intend to keep in the medium or long term, an offset mortgage can be a solid choice.

If you wish to speak to an LGBT-friendly financial adviser about offset mortgages or any other aspect of your finances, please enter your postcode under the map on your right, to find an adviser near you.

Additional Reading

  • Offset Accounts

    Offset bank accounts mean that you use all credits in your account to offset your mortgage! You also pay no tax on savings either as the credit is used against the mortgage. Find out more and find out how you can access LGBT-friendly financial advisers.
  • Mortgage Protection

    With mortgage protection it does what it says on the tin! Get the right policy and if you are injured or have a long term illness, some or all of your mortgage payments are covered.
  • Discounted Mortgages

    Are you looking for discounted mortgages and mortgage products online? Why not check our simple guides and then call us for help.
  • Tracker Mortgages

    Tracker mortgages do just that! Track the Bank of England base rate for the period of your mortgage agreement. Read our simple guide to find out more.
  • Commercial Mortgages

    Are you looking for commercial mortgages for new premises? Read our guides and get advice from one of our LGBT-friendly financial advisers.

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