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.

The Next Step

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.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. City Investments is an Appointed Representative of the M&E Network Ltd, which is authorised and regulated by the Financial Services Authority. The M&E Network Ltd is entered on the FSA Register ( under reference 150643.

Licensed credit brokers. Written quotes on request. Loans subject to status. A suitable life policy may be required. Be sure you can afford the repayments before entering into any credit agreement. Information on this site is believed to be correct at time of issue and subject to change without notice. Any quotation issued is not an offer of a mortgage. Mortgage fees may be payable. The exact amount will depend upon individual circumstances. Please ask for an individual quotation. Typically, however, the fees may be £90 on application and £150 on completion.

The information on this site is for general guidance only and is subject to the UK regulatory regime. Privacy Statement/General Terms. It is targeted at consumers based in the UK City Investments is owned by G Davies BSc (Econ), CeMap, Principal. © Copyright City Investments February 2004. All rights reserved.