Discover the benefits of offset mortgages with our trusted advisers in Maidstone. Offset mortgages offer a flexible way to manage your finances, allowing you to use your savings to reduce the interest on your mortgage. This can potentially save you thousands of pounds in interest over the life of your mortgage. Additionally, offset mortgages can provide a tax-efficient way to use your savings, as the interest you save is not subject to tax. Our tailored offset mortgage services are designed to help you make the most of this innovative financial solution.
In return for not receiving any interest on their savings, the homeowner can reduce their monthly payments or shorten the mortgage term, an arrangement known as ‘offsetting’. An Offset mortgage is only available where both the mortgage account and the savings account/accounts are with the same provider.
For example, on a £200,000 mortgage, if the homeowner offsets £20,000 of their savings against their mortgage, he or she would pay interest on the outstanding balance — £180,000. As the rates of interest charged on mortgages are usually higher than those paid on savings accounts, offsetting can be more financially advantageous to the borrower.
Furthermore, homeowners can use an Offset Mortgage to either shorten the term of their mortgage or reduce the monthly repayments. Borrowers who wish to shorten the term of their mortgage would base their monthly repayment on the full £200,000 mortgage and pay more each month than the lender requires them to. Or the homeowner could base their monthly repayment on the lower (offset) figure of £180,000, which would reduce the monthly repayment but the term of the mortgage would remain the same.
Another aspect of an Offset Mortgage relates to income tax. In addition to reducing the interest on their mortgage, the homeowner might pay less income tax simply because their savings are not earning any interest.
On top of the money in the savings account, some providers allow borrowers to offset the cash in their current accounts and their cash ISAs against their mortgage debt. If the borrower makes withdrawals from any of the accounts that are linked to their mortgage, the amount of savings offset against their mortgage reduces.
In common with other mortgages, Offset Mortgages are available on a fixed and variable rate of interest basis, although some borrowers may charge a higher rate of interest for providing an Offset Mortgage than a standard mortgage.
Offset mortgages can be a powerful tool for financially savvy homeowners. We can assess your individual circumstances, explain how your savings can potentially reduce your mortgage interest, and help you decide if an offset mortgage is the best strategy for you.
Contact us today to learn more about our offset mortgage services.
