Offset Mortgage - Do I reduce the Term or Reduce the Payments?

mvteng

Thrugelmir wrote: »

OP has an interest only mortgage not a repayment.

Yep, mine is an interest only offset mortgage.


The example I gave is how my Clydesdale bank offset interest only mortgage works.


I guess from the posts that the only thing we can be certain of is that different companies offset mortgages work in different ways.

mvteng

Thrugelmir wrote: »

That's how my offset mortgage worked with the HRBS.

Mortgage systems aren't built for complex calculations as you suggest. The majority of mortgage lenders only recalculate the interest (monthly payment) at a rate change. The interest is therefore calculated on £100k. Every month a notional credit for the interest earnt on the offset is deducted from the mortgage account.

My Clydesdale bank offset mortgage works exactly as AnotherJoe suggests.


It doesn't seem particularly complicated to me.


Each month they send a statement with a day by day breakdown of the interest charged. This varies on a daily basis due to, for example, my salary being paid in.