offset mortgage confusion

sungiggs1

Hi I have just read about offset mortgages not something I was aware of.  Currently we are on a SVR of 6.59% with approx 42,000.  We do want to move at some point hence why we haven't fixed and also due to my husband being a new teacher not permanent yet.  We currently have over 42000 in savings.  We do not wish to clear the mortgage at this point due to wanting to move.  Can anyone advise me if I am right in thinking an offset mortgage would mean we wouldn't pay any interest but would continue to pay off capital?  Also do offset mortgages allow overpayment? Thanks

housebuyer143

sungiggs1 said:

Hi I have just read about offset mortgages not something I was aware of.  Currently we are on a SVR of 6.59% with approx 42,000.  We do want to move at some point hence why we haven't fixed and also due to my husband being a new teacher not permanent yet.  We currently have over 42000 in savings.  We do not wish to clear the mortgage at this point due to wanting to move.  Can anyone advise me if I am right in thinking an offset mortgage would mean we wouldn't pay any interest but would continue to pay off capital?  Also do offset mortgages allow overpayment? Thanks

Yes, in your case if you move to offset and offset the entire balance then you pay no interest at all. You would pay the capital repayment but then you just take that payment out of you offset account each month and get it back. 

Only 6 lenders do it though so you would have to meet their criteria and they all have higher than normal rates and fees on offset.

silvercar

if you if you plan on moving soon, check for early redemption penalties and if the mortgage would be portable.