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Keep your savings in one, easy to manage account linked to your mortgage
An offset mortgage UK is a type of mortgage that provides you the homeowner with a way to reduce your interest payments and pay off your mortgage loan sooner. It works by linking your savings account to your mortgage, so any money you save can be used to reduce the amount of interest charged on your loan.
This allows you to make more progress in paying down your mortgage faster, and potentially could save thousands of pounds over the life of the mortgage loan. Not only can an offset mortgage help you reach financial freedom more quickly; as interest is applied only against what remains outstanding on the loan, homeowners may also benefit from a lower tax bill due to reduced or eliminated interest charges.
How to make an offset mortgage work for you
- Pay your mortgage off sooner – You benefit from paying off your mortgage more quickly, but keep your monthly payments the same.
- Reduce your monthly payments now – You benefit from lower mortgage payments now, but keep the same mortgage term.
- Reduce your payments in the future – You benefit from lower mortgage payments every time your account is reviewed annually, but keep the same mortgage term.
Flexible way of managing debt
For example, if you held £20,000 in an offset savings account while also having an outstanding £100,000 mortgage balance, you would only be charged interest on £80,000 rather than the full amount.
Instead of you earning interest on your savings, the lender will reduce the amount of interest charged on your mortgage.This generally results in a lower monthly payment for the borrower and offers them more flexibility with their finances.
Might be something to consider right now
Additionally, since the offset mortgage is linked to a savings account, you can access those funds whenever you need. Overall, an offset mortgage provides homeowners with a flexible way of managing your mortgage debt while also having easy access to your savings in case of an emergency.
With interest rates on the rise and mortgages getting more expensive, overpaying your mortgage might be something to consider right now. It could save you thousands of pounds. But savings rates are also on the rise, so only overpay if the rate you are paying on your mortgage is higher than the rate on your savings.
Overpaying
Many lenders will let you overpay a certain amount each year on your offset mortgage. Generally, you can usually overpay by up to 10% a year. But it’s worth checking any limits on overpayments. Paying more than you are allowed could mean you have to pay an early repayment charge.
We have written about Offset Mortgages in the past and how you can make big savings or if you are wanting to learn more about other types of mortgages this blog might help.
Offset mortgages can be very helpful in certain financial situations but are not right for everyone. To discuss your requirements, give the team a call on 0800 612 5596 or fill in the contact us form on the website.
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At Yes Mortgage Services, we offer a comprehensive range of products from across the market.
Irrespective of whether you are looking to buy a new home, re-mortgage an existing property, or looking to protect your family from the unpredictability that life throws at it or protect your income if you are unable to work due to accident or ill health.
Yes Mortgage Services are committed to offering you the highest possible standards of service. We can undertake the whole process from answering the initial questions through to handling multiple product applications. Ensuring that everyone gets treated with the same urgency and maintaining your best interests are our main goals irrespective of the value of the mortgage.
We recognise that both we and our customers have everything to gain if we look after your best interests and treat you fairly in all aspect of our dealings with you.
