Offset mortgages can be a great way to save money, but they’re not that common, meaning that many people don’t even know they exist. So how do they work?
Put simply, an offset mortgage lets you link your savings to your mortgage. Instead of earning interest on your savings, you’ll pay less interest on your mortgage. So, for example, if you have a mortgage of £125,000 and you have £25,000 in your linked savings accounts, then your monthly mortgage interest would be calculated on £100,000 instead of the balance of £125,000.
An offset mortgage can save you money and mean you pay your mortgage off sooner. But they can be more expensive than other deals and you may find it harder to find one that suits you.
A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.