New Home Owners And Snagging Forum
Home Owners => Mortgages and Insurance => Topic started by: The Prophet on June 25, 2011, 11:20:50 am
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Historically low interest rates on savings accounts and inflation mean that getting a real return on your savings is all but impossible.
However, if you link your savings to your mortgage, you can reduce the overall amount of debt you are paying interest on.
In effect you are getting a return on your savings at your mortgage rate, tax-free.
This is the advantage of an offset mortgage. You still have the savings at your disposal and can withdraw the money at any time.
In the past this type of mortgage used to have a higher interest rate than a traditional mortgage.
However, the gap has narrowed and the average offset mortgage is now just 0.36% higher than a standard mortgage - and you pay off your mortgage earlier too!
A survey by Yorkshire Building Society showed that just 7% of borrowers considered an offset mortgage when arranging a new home loan.