Offset Mortgages - What Are The Benefits Of An Offset Mortgage

An offset mortgage allows the borrower to have all their money in one place, including your mortgage, savings, current account and loans. This means that you can organise your finances better as you can see where all your money is and you have greater flexibility over your money.

With an offset mortgage you will pay a lower interest rate on everything you borrow, and this can save you a great deal of money over time. There are of course other benefits to having an offset mortgage such as -

You will benefit from good returns on money that will not normally work for you such as money in current accounts and you won't have to pay tax on it.
You are able to see all your money as one single balance, or as separate balances for your mortgage, loans and savings this gives you greater flexibility over what you do with your money.You are able to decide how much you want to repay on your offset mortgage each month.You are able to access your money at any time; this can be directly through the branch, on the internet or over the telephone.

There are of course drawbacks to having an offset mortgage such as -
Compared with a standard discounted mortgage that is similar you will find that you are paying a higher rate of interest.Compared with a mortgage that has a fixed rate an offset mortgage will not offer you any stability.

Is an offset mortgage right for you?
As a guide to who should have an offset mortgage in the main they work very well for high rate tax payers you have a reasonable amount of savings in the bank. (Around 5000 or more) This profile of customer is risk adverse and will be paying 40% tax on the bank account and savings accounts which will mean that their savings returns will be lower than the mortgage rate they would be paying on an offset. Offset mortgages can also work for people you have a large amount of savings that they do not want to tie up and want instant access to their monies at any time.

Offset Mortgage Rates
In the beginnings of the offset mortgage market there were only variable rate mortgages available on this type of mortgage scheme. Now there are many lenders offering the benefits of a fixed rate with their offset mortgages. Although in many cases the fixed rates will be higher than a standard fixed rate they are still worth while considering.

Choosing an offset mortgage
If you would like to know more about getting an offset mortgage you can either visit one of the many online mortgage comparison websites or speak to trained mortgage advisors who will help you to work out if an offset mortgage is the right one for you.