Types of Offset Mortgages
Types of Offset Mortgages
Many of the mortgage lenders, banks and building societies offer offset mortgages and compete with each other by offering different features and variants of a standard offset mortgage.
Standard Offset Mortgage & Current Account Mortgage
A standard offset mortgage may only be offset by your savings account whereas a current account mortgage will offset against your current account and additional accounts. The main benefit of current account mortgages is that your current account and mortgage is classed as one account. Additional savings can go towards reducing the debt balance and therefore the interest, plus you can transfer debts such as credit cards and personal loans across, basically paying the same interest rate for all your finance’s and keeping it all in one account.
Family Offset Mortgage
With first time buyers having difficulty getting on the property ladder, a family offset mortgage could be the key. A family offset mortgage enables parents to help children onto the property ladder. The first time buyer’s sign up to the mortgage and their parents or family members put their savings into the same bank, with those savings being offset against the loan and saving the purchasers thousands in interest. Access to the saved money is available but the more taken out of the account means the more interest the borrowers pay.
Flexible Offset Mortgages
Offset mortgages usually have the flexibility of overpaying, underpaying or taking payment holidays. This flexibility gives the mortgage borrower plenty of flexibility if required, however the interest will continue to accrue on the mortgage during any payment holiday. If you manage to get a lump sum or you can add it to your savings balance or pay off more of your mortgage but with an offset mortgage you can add the amount to your savings, save on interest and still have access to your money if required.
You can make overpayments directly to your mortgage debt at any time, without penalty, which gives you the opportunity to pay off your mortgage early.
