off set mortgage...

james3333

basically, what is one?
i have £9,000 in savings, can i use this to reduce my mortgage, get a better deal or take time off the mortgage?
sorry, keep hearing about them but cant get any understandable info.
cheers

vacheron

If you look on the website of companies which provide offset mortgages (Barclays, First Direct etc.) they have easy to understand animations and videos etc. which will fill you in on the basics.

Basically though, they allow you to use money you have in savings to reduce the mortgage interest charged rather than earning interest themselves. This allows you to either reduce the monthly payments, or reduce the mortgage length. The provider will usually allow you to choose which you prefer and switch between the two.

As a general rule, most people consider that you need 20-30% of your mortgage held in savings to make them worthwhile. If you are a high rate tax payer they are even more useful.