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What is an offset mortgage?
monty-doggy
Posts: 2,134 Forumite
I keep on hearing the term offset mortgage, can someone please explain what it is and how it works? Thanks!
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monty-doggy wrote: »I keep on hearing the term offset mortgage, can someone please explain what it is and how it works? Thanks!
Offset mortgages can vary depending the provider, some may include your current a/c.
But usually it refers to savings that you allocate to an offset mtg a/c. You do get interest on it but the total is deducted from your outstanding mortgage and the interest is charged on the difference.
Having an offset mtg., therefore means that you will pay of earlier, because more of your repayments are used to reduce the outstanding balance.
If you did get interest on your savings it would be taxable, what you gain this way is not. Moreover if you are on WTC the interest would be included in 'other income' this way its not!I used to work for Tesco - now retired - speciality Clubcard0
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