• Recent Posts

  • Qualifying for a Reverse Mortgage
  • Access Money With Home Equity Loan And What is Low Doc Home Loan?
  • Equity Releases And Determining If They Are Right For You
  • The Truth Behind Homeowners’ Insurance Premiums and Policies
  • How You Can Remove a Foreclosure from Your Credit Report
  • The Benefits of Credit Repair and Consolidation Agencies
  • Why Latinos and Hispanics take out Loans
  • What Is A Adjustable Home Loan Mortgage Rate
  • Budget Now for Your Retirement
  • How to Understand Your ARM and Keep Your House
• Search for:

• Blogroll

  • Mortgage Resource Guide

Offset mortgages are a unique type of mortgage that is only available in the UK, or in and around Europe. Basically, if you have a savings account you can attach that to your mortgage loan, and whatever you have in savings will be deducted from your total loan. Those who get a mortgage for the entire value of their home, but have 100,000 in savings end up pretty lucky. There is no limit to how much you can offset, and interest is charged on the difference.

The advantages of using an offset mortgage are incredible, and those who use it rarely complain. It is friendly to your wallet, and also tax efficient. Offset mortgages allow room for low interest.

If you have a mortgage, or two, out for a total of 500,000, but you also have a savings account that you cannot use; then an offset mortgage comes into play. You can pay these off fast, and easily.

Even better yet, not spending your savings at all can increasingly lower your interest and payments that you owe. If you start off owing 200,000, then use your savings as an offset of about 50,000, then you pay 50,000, you would only be charged interest on 100,000. This is significantly better on your finances than not having an offset. Without an offset mortgage you would have ended up owing 200,000 which would all carry interest.

However, there are some slight disadvantages. Offset mortgages only work to their highest potential if you have a hefty savings account. Since most people do not want to even think about touching their savings, you can use that as a way to spend it, but not literally. Those with only very small amounts in savings would not benefit greatly with an offset mortgage.

Another side benefit is that at any point during your mortgage time, you can add to your savings account. If only have 10,000 to start off with, you can add 5,000 later, and still reap the positive interest lessening benefits.

Closing Comments

Offset mortgages are great for those that have money in savings, but cannot spend it or do not want to spend it. For an offset mortgage to work, you need to have something in savings, preferably a larger amount. A few hundred euros would not benefit you for an offset mortgage.

Comments