On the advantages of offset mortgages
Hello!
Offset mortgages are all the rage at the moment. They have many benefits, but don’t necessarily have the best rate. However, the value of an offset mortgage is not in the rate, but in the benefits.
An offset mortgage is when the lender sets a credit limit at the outset and allows the borrower to withdraw up to this limit. It’s based on the value of the property, is fully flexible and allows a borrower to secure a drawdown facility and keep balances (such as mortgage debt, savings account and current account) in separate accounts.
What are the advantages of having an offset mortgage?
- Clients can draw down funds within their agreed limit whenever they wish; eg for the deposits needed for a buy to let purchase! This flexibility means that clients can react quickly to purchase opportunities!
- Money in savings or current accounts is ‘set against’ (or ‘offset against’ – hence the name Offset Mortgage) the mortgage balance and interest is only charged on the amounts withdrawn.
- Buy to Let investors can use their rental income to help pay off their residential mortgage just by putting back the rent into the offset account when collected. It all helps to reduce the amounts needed to service the offset mortgage and reduce the period of the mortgage. Excellent for the self-employed because the ‘pot of money’ can be useful for cashflow – but they need to be incredibly disciplined.
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Please call me if you want to discuss the benefits of Offset mortgages.
Regards
Nick Rossington
Director of Financial Services
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