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City
Investments Independent Guide to Offset Mortgages.
We specialise in arranging offset mortgages. Offset Mortgages
are relatively new to the UK mortgage market but are becoming
increasing popular with some clients. This is a mortgage feature
designed to use your savings to help you to pay off your mortgage
early and save money.
This type of mortgage can be divided into two broad categories.
Current accounts mortgages and offset mortgages.
Current account mortgages are sometimes
known as one account mortgages. Here your mortgage and your
current account and your savings are amalgamated into one
account. As your finances are together in one account, you
can use your income, your savings - and any money you have
left over at the end of the month - to reduce your mortgage
on a daily basis.
This can save you significant amounts in interest and cut
years off your mortgage.
By paying your savings into the account you can use them
to reduce your mortgage and save interest on a daily basis.
As it is interest saved rather than earned, there's no tax
to pay.
A disadvantage of this style of mortgage is that they can
be difficult to manage s all your fund are merged into one.
Offset mortgages are very similar and offer
the same benefits without tying all your accounts together.
With an offset mortgage the interest on your mortgage is reduced
by the funds in both your savings accounts and your current
accounts. The more you have in your savings account, the less
interest you pay on your mortgage. This feature of an offset
mortgage helps you to repay your mortgage faster and more
cheaply in the long term. Your part of the deal is that you
don't receive any interest on your savings or your current
account.
A major benefit of an offset mortgage is that with base rates
low at the moment, savings rates are not exciting. So rather
than working to give you a small amount of interest, with
an offset mortgage, your savings work to cut down your mortgage
payments and repay your mortgage faster.
Some offset mortgage companies allow you to link your other
debts, such as your credit cards or your personal loans into
the nest of products. This type of offset mortgage arrangement
allows you to repay all of your debts at the mortgage rate,
which is likely to be a lot lower than your pay rate on those
borrowings. A further advantage is that the credit cards and
loans remain unsecured borrowings even though they are paid
off at the mortgage rate, so if you can't keep up the repayments
on those your home is not at risk.
But do not forget that should you be consolidating your debt
into your offset mortgage what you are actually doing is turning
short-term debts into long-term debts. Consolidated debts
should be paid off as quickly as possible otherwise they will
cost you more in the long run. You shouldn't be tempted repeatedly
to get into more debt.
With this type of offset mortgage, you can see all of your
savings and debts in separate accounts even though they work
together, people feel safer with them. This is unlike a current
account mortgage, where your accounts are mixed together as
if you have one massive overdraft.
Essentially, it's like emptying your savings into your mortgage
account in order to pay it off, without losing the easy access
to the funds.
The people that will find offset mortgages very suited to
them are people with volatile incomes, such as the self-employed
or people often paid in large bonuses. People with significant
amounts of savings will also find offset mortgages useful.
But how do you find the right deal for you. There are many
different lenders in the offset mortgage market. We believe
all clients have a unique set of circumstances. Contact us
and we will look at your circumstances in confidence. We have
powerful mortgage software which is updated daily over the
Internet. This means we have access to up to the minute information
on the whole of the mortgage market. Using this we can scour
the market for you and identify the most suitable deals that
meet your particular needs.
We will steer you through the minefields of a lenders redemption
penalties, and higher lending charges -
should these be applicable to you. We are also happy to talk
you through the main repayment methods
Our service is not redistricted to our local area. We have
clients all over Great Britain. We are able to help wherever
you are in the UK. If you would like to discuss you circumstances
in confidence, please do not hesitate to get in touch on City
Investments 01244 317788
Think carefully before securing other debts against
your home. Your home may be repossessed if you do not keep
up repayments on your mortgage.
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