offset mortgage question

westy69

Hi folks this question is theoretical as its designed to help me understand offset mortgages

if i have a mortgage of 70K over 25 years i then offset my savings of 70K against the mortgage bringing my monthly payments to 0.00 at the end of the 25 years assuming the 70k is still saved (offset) and i want my 70k savings back how much do i owe on the mortgage?

thanks in advance

dimbo61

That will be £70K as you have not paid one penny off the balance!!!
Now if you normal repayment mortgage on £70K is say £700 a month then some of that is interest and some repaying the capital.
If you therefore have the same amount in the offset account as you owe on the mortgage then you pay no interest at all BUT you still need to repay the capital

westy69

Thankyou :beer:

jackomdj

But if you are fully offset & paying monthly payments you will end up with cash not earning interest.

Ie
Month1 owe £100000 pay £1000 new mortgage bal £99000 but £100000 in savings pot so £1000 not earning interest
Month2 owe £99000 pay £1000 new mortgage bal £98000 but £100000 in savings pot so £2000 not earning interest
But if you TFT £1000 out of your savings pof each month into an interest bearing account you will still fully offset, still have your £100000 savings at the end plus interest earnt on it.

This assumes you do not get interest if your pot is full!