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Save on loan interest when you offset your mortgage

contractor-mortgages

Do you need a new mortgage? Are you receiving a low return on your savings but don’t want to put them in to property?

Like all mortgage applications your Mortgage Consultant will consider which best fit your requirements, circumstances and affordability. However, we’re all looking for ways to keep our repayments low and one way to do that is to look at an Offset mortgage.

This type of mortgage allows you to offset your savings against your mortgage loan, potentially reducing the amount of interest you pay. For example, if you owe £200,000 on your mortgage and you have £20,000 in a linked savings account, you’ll only pay the interest on £180,000.  Alternatively you maintain your monthly payments and rather than saving the payment, it goes towards overpaying the mortgage.

If you’re planning on keeping your savings in a high interest account long-term, an Offset mortgage may not be for you, however, if the interest you would earn is lower than the repayment interest, you could save a great deal long-term. Don’t forget that placing your savings in to a linked offset account means that you will no longer be paid interest on your savings, you are offsetting your savings against your loan in order to save interest due to be paid on your loan.

If you’re a higher rate, or additional rate tax-payer, an Offset mortgage can be beneficial as your linked savings wouldn’t be liable for tax.

So what do you get with an Offset mortgage?

  • As you pay less interest, offset mortgages can help you to pay your mortgage off a little earlier.
  • The majority of linked offset savings accounts are instant access, however this will impact the interest you pay on your mortgage. The more you take out, the less you will benefit long-term.
  • Deals for Offset mortgages are usually very competitive in line with other repayment mortgages and offer a great deal of flexibility.
  • If you don’t have a great deal of savings, you may be best opting for a low interest rate mortgage instead, as you won’t see the benefits.

To find out if an Offset mortgage could work for you, call one of our Mortgage Consultants today on 020 3040 4400.

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FCA
Springtide Capital Limited is authorised and regulated by the Financial Conduct Authority.

Important Legal Information
There may be a fee for mortgage advice. The precise amount will depend upon your circumstances and loan amount. The FCA does not regulate most buy-to-let, second charge or commercial mortgages. The Financial Ombudsman Service is available at www.financial-ombudsman.org.uk or by contacting them on 0800 023 4 567. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

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