Ever heard of an offset mortgage?
Many people haven’t heard of the offset mortgage yet, but it still remains one of the most cost-effective ways to have your mortgage set up and has multiple benefits to you.
At its core, the offset mortgage is a basic mortgage like any other, but the way the mortgage allows you to use other available cash or savings balances to “Offset” against your existing mortgage is where it really can make a significant difference.
You can save THOUSANDS in interest with an Offset mortgage and repay your mortgage EARLIER by years!
Used correctly the Offset mortgage really can make the most of your finances and no longer do you have to have funds which you can’t invest sitting around earning little to no interest. Now you can really make your money work hard for you.
This is achieved in 2 ways that ultimately reduce the interest you’re charged, but you decide which option you want for your mortgage:
- Reduce your mortgage payments
- Reduce your mortgage term
So how does it work, well the easiest way to consider the offset mortgage is to imagine that your mortgage is one big overdraft (like the one you likely already have with your current account) and that just like an overdraft if you pay funds into it, you reduce the outstanding balance and therefore the interest you would be otherwise charged as you’re reducing the outstanding balance.
The offset mortgage is different to just simply making overpayments on your mortgage. Overpayments are a one-way ticket for your funds as once you’ve made that overpayment to ask for the lender to allow you access to that again essentially means a new mortgage application for additional borrowing from the property. So in practice, it’s a one-way ticket for the overpayment, but the offset mortgage works very differently; you always have access to any and all your savings instantly, they’re not tied in or have any notice periods.