Overpaying on a repayment mortgage vs an offset repayment mortgage

in Loans
4 replies 151 views
ayersayers Forumite
42 Posts
Part of the Furniture 10 Posts Combo Breaker
Good Morning.

I was just listening to your Podcast on mortgages which was released on the 3rd of November and had a question. Which of these two options is better:

to overpay on a 25 year repayment mortgage
to have a 25 year offset repayment mortgage if you one has savings that is 10% of the oustanding mortgage loan?

Thank you.


  • Bob~24601Bob~24601 Forumite
    28 Posts
    Part of the Furniture 10 Posts
    I will depend on the rates, and if you will need some of that money back at a later date. 

    Repayment is normally has a lower interest rate, but offset allows you to maximise the full amount of your savings against the mortgage, and then allows you to use that money if needed. 

    If you won't need the money at all then I would go for repayment, but if you are unsure I would go for offset, assuming that you are happy with the higher rate. 
  • ayersayers Forumite
    42 Posts
    Part of the Furniture 10 Posts Combo Breaker
    Thanks Bob!
  • tetrarchtetrarch Forumite
    112 Posts
    Part of the Furniture 100 Posts Name Dropper
    Offset was a godsend for us last year. I had a fully offset mortgage and was able just to dip into it to enable us to be cash buyers for our dream house whilst we then sold the old one. Without it we wouldn't have even got a look-in

    It gives you so much flexibility that I would recommend an offset mortgage everytime

    I would also recommend Barclays for offsets as they allow you to nominate a cash ISA account for the offset facility. This can help you build up a risk-free ISA wrapper that can help with retirement planning


  • ThrugelmirThrugelmir Forumite
    89.5K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Offset mortgages are generally a higher rate of interest. The service has to be paid for. 
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