Offset mortgages

UK Offset Mortgage

With an offset mortgage all of your finances are linked. This means that your credit cards, current account, mortgage and savings are held with the same lender. This means that any accounts in credit are offset against the debit ones.

Instead of being paid interest on savings and current account you don't pay interest on the equivalent amount on your mortgage debts.

As with standard flexibles, the interest is adjusted daily. Therefore, your current account and savings are helping to reduce your mortgage balance every day.

There are tax advantages with this type of mortgage because you don't receive any interest on your savings and you don't pay tax on them. This is a mortgage that appeals to high earners, as all the interest is going to help reduce the interest on the mortgage debt. As long as you are able to cover the interest due on the mortgage each month, then there is the flexibility to repay the mortgage however you want. This can be done as a traditional capital repayment with a direct debit from a current account to a mortgage or by arranging an Isa or endowment policy to repay the mortgage.

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