Are you looking for more information about Offset mortgages? Look no further! In this blog post, we’ll explore what an Offset mortgage is and how it works, using Coventry Building Society as an example. We’ll also take a look at other verified mortgage lenders that currently provide Offset mortgages.
What is an Offset Mortgage?
An Offset mortgage is a type of mortgage where your savings are used to reduce the amount of interest you pay on your mortgage. This means that the more savings you have, the less interest you’ll pay on your mortgage. With an Offset mortgage, your savings offset the interest you pay, helping you save money overall on the cost of repaying your mortgage.
Coventry Building Society example
Coventry Building Society offers Offset mortgages for residential properties only – they don’t offer them for Buy to Let. With a Coventry Offset mortgage, you can choose to reduce the term of the mortgage, the outstanding balance or your monthly mortgage payment depending on whether you choose a repayment or an Interest-only Offset.
Even a small amount saved regularly can make a big difference. And you can access your savings whenever you want to.
How does an Offset Mortgage work?
Let’s take a closer look at how an Offset mortgage works. One savings account is linked to your Offset mortgage to reduce the amount of mortgage interest you’re charged. You still have to make your contractual mortgage payment each month, but the lender only charges interest on the difference between your Offset savings balance and the mortgage amount. The mortgage interest you save is called the Offset benefit.
With a repayment Offset, you can use the Offset benefit to help reduce the mortgage term or your monthly mortgage payment, whichever suits you best. You can switch how you use the Offset benefit whenever you like.
Example
Here’s an example to help illustrate how an Offset mortgage works. Let’s say you have a £100,000 mortgage and £20,000 in savings. With an Offset mortgage, you would only charge you interest on £80,000 (the difference between your savings and the mortgage amount).
It’s important to note that with an Offset mortgage, the money in your Offset savings account won’t earn interest because it’s offsetting the interest payable on your mortgage. However, even though your savings won’t earn interest, they will still help reduce the amount of interest you pay on your mortgage.
Other Verified Mortgage Lenders
In addition to Coventry Building Society, there are several other verified lenders that currently provide Offset mortgages in the UK. These include Barclays and first direct.
Each lender has its own specific terms and conditions for their Offset mortgages, so it’s important to do your research and compare rates before choosing a lender.
How do I know if an Offset Mortgage is right for me?
An Offset mortgage can be a great option for those who have significant savings and are looking to save money on their mortgage repayments. However, it’s important to consider whether an Offset mortgage is right for you based on your individual financial situation.
It may be helpful to speak with a financial advisor as well as a mortgage broker or do some research online to determine if an Offset mortgage is a good fit for you.nIn conclusion, an Offset mortgage can be a great option for those looking to save money on their mortgage repayments.
We hope this blog post has provided you with valuable information about Offset mortgages and how they work. If you have any further questions or would like more information, please don’t hesitate to reach out! We’re always here to help.
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