In the UK market, offset mortgages are still a relatively new offer. An offset mortgage is designed to work by taking advantage of the fact that UK savers will usually receive less interest for their savings then the interest that they pay on their debts. What this means is that an individual?s savings account is directly linked to their mortgage. In the long run, if you are disciplined about your finances, an offset mortgage can help save money. If you have a savings account already established then the savings account will be directly linked to the mortgage account. Instead of the savings account earning interest, the money is used to lower the balance of their mortgage.
There are tax advantages to having an offset mortgage. This is especially true if you are a higher rate taxpayer. The taxpayer does not have to pay tax on the reduced amount of interest that is paid. So instead of receiving three percent after taxes, one is actually saving six percent on their mortgage.
Who Should Consider an Offset Mortgage?
Offset mortgages are good for people who receive sizable annual bonuses or who are self employed. A self employed homeowner can benefit from their cash working against their mortgage debt by setting aside money into an offset account. Adding annual bonuses to the offset mortgage account can make a substantial difference. To see how much money can be saved use an offset mortgage calculator.
If you'd like more information on offset mortgages, take a moment to complete a short questionnaire, and we will connect you with an offset mortgage broker who will be able to answer any questions you may have about offset mortgages. Once your question have been answered, the mortgage broker will search all available offset mortgage deals to find the best possible deal for your circumstances.