2nd-Mortgage

Finding the best offset mortgages deal can be challenging. There is a huge amount of information on the internet and on the high street about offset mortgages, but instead of giving you clarity, it can leave you overwhelmed and confused as to which is the best offset mortgages deal on the market.

Offset mortgages link the balances in a borrower’s mortgage account and/or savings account. Interest earns from the savings and/or current accounts are used against the mortgage debt and in theory; the mortgage can be paid off quicker. It is also flexible and allows overpayments, underpayments, and sometimes payment holidays.

Offset mortgage could also cut your credit card bills as offsetting the credit debt could save you huge amounts. Instead of paying even the lowest rate of 14.9 percent, you will only pay the interest rate connected to an offset mortgage which is around 6 or 7 percent, certainly less than credit card APRs. This means you could be making massive savings on your credit card debt, as well as your mortgage.

The interest rate also varies considerably – from a 6-12 month fixed rate, to a tracker guaranteed to stay below the base rate for 6 months, or a tracker which tracks the base rate for a set amount of years, but also charges a minimal premium.

The amount you are borrowing compared to the value of the property will also affect the interest rate. At the moment one lender will give an interest rate of 5.6% for people that are borrowing less than 50% of the property value, whereas anything above that (up to 99%) will have an interest rate of 6.45%.

The concept may be easy for you to get your head around, but the sums won’t be. See an independent mortgage adviser for individual advice tailored to your circumstances, it’s the only way to be sure that the offset is best for you. However, we think that if you have savings and pay interest at a higher rate, you’ll be onto a winner with the offset.