MyFinances.co.uk
News feeds Free newsletter

All the latest personal finance news - helping you make the most of your money

Mortgage glossary

Offset mortgages

Offset mortgages are loans secured against a property that take any money in a customer's savings and current accounts away from the value of the loan.

This means that someone with a £100,000 mortgage, £9,000 in a savings account, and an average balance on their current account of £1,000, would effectively have their mortgage debt reduced to £90,000 - and only pay interest on this amount.

Over the term of a mortgage this can potentially lead to savings of thousands of pounds in interest paid on the value of the original amount borrowed, as well as letting people pay-off their mortgage years earlier. However, there are disadvantages: savings and current accounts must be held with the mortgage-lender and do not accumulate interest.


Recommended ... 

Related articles 


Disclaimer:
myfinances.co.uk is not authorised to give advice under the Financial Services and Markets Act 2000.

Terms:
By using this site, you are deemed to have accepted our terms of use.

myfinances poll 

2009 is set to be a tough year for the UK finances. We want to know what you are expecting. Vote now.

Free stuff 

Sign up for our free daily newsletter and other free stuff.