Offset Mortgages | The offset mortgage explained and help at hand

Here we delve deeper into Offset Mortgages and how the Offset Mortgage works. We also take a look at the potential benefits and possible drawbacks and explain how Shire Direct can help arrange an Offset Mortgage even in the trickiest of circumstances!

Table of Contents:

What are Offset Mortgages? The Offset Mortgage explained!

So, what is an Offset Mortgage you might be wondering. Well they say you shouldn't answer a question with another question, but we think in this instance it will be useful to break the rules!

Would you like to pay your mortgage off early?
Would you like to pay less interest over the term?
Would you prefer not to pay tax on your savings?
Would you like to win the lottery?

We assume the answer to all four questions is more than likely a resounding "Yes!".

Well, we can probably help provide a solution for the first three, but as far as the lottery goes, we'll have to leave it your skills!

The Offset Mortgage is one of the more recent innovations in the mortgage marketplace. Basically this type of mortgage rolls your mortgage borrowing, savings and current account all into one account and simply reduces the amount of mortgage interest charged by offsetting your savings and any credit balance you may have on your current account!

There's a misconception that you have to be a highly sophisticated borrower with a substantial amount of savings to benefit from an Offset Mortgage. Not a bit of it, any amount of savings, or merely operating the credit balance of your current account against your mortgage should mean you pay less interest on your borrowings, and no tax on your savings!

Offset Mortgage Advantages

So, what are the benefits of an Offset Mortgage? The concept of the offset mortgage is an excellent borrowing solution for those customers who have some savings put away for a rainy day, and would like to combine the following advantages to offset mortgages:

No interest is paid on your savings - therefore there is no tax to pay!
However, an interest rate equivalent to approximately 8% for Basic Rate Tax-payers, and approximately 11% for those paying the Higher Rate of Tax can be achieved on an offset mortgage charging 6.5%. This compares well against a corresponding rate of 3.5% - 4% that would otherwise be paid on savings accounts, less tax of upt 40% if you are a High Rate Tax-payer.
The prospect of repaying your mortgage more quickly, and therefore the potential of paying less interest over the shortened period!
Immediate access to your savings, which remain separately earmarked, and are at no time surrendered to the lender.
Offset Mortgages can be particularly useful for self-employed borrowers, especially where income and therefore savings can fluctuate enormously, and are ideal for saving for the tax bill.

Offset Mortgage Disadvantages

So are there any potential downsides to an Offset Mortgage? The main disadvantages to Offset Mortgages are:

There is usually no preferential rate. In other words, borrowers will not usually be offered a fixed, discount or capped interest rate.
Most lenders charge an application / scheme fee that can be fairly expensive.
Interest rates charged on Offset Mortgages are traditionally fractionally higher than those charged on conventional homeloans due to the fact they are more expensive to administer, although as this type of mortgage becomes more popular, the disparity continues to diminish.

How do Offset Mortgages work?

Quite simply your savings are kept in special offset mortgage accounts which are used to cancel out mortgage debt! The funds to be offset are kept in either current or savings accounts, and the mortgage interest is charged only on the net balance. For example, if a borrower's mortgage loan is £100,000, and he has savings of £10,000, the borrower only pays interest on £90,000.

Can Shire Direct provide me with an Offset Mortgage?

Yes, with pleasure!

As you are more than likely aware, today's Mortgage marketplace can appear incredibly complicated, and indeed it is somewhat complex. Finding just the right mortgage product for you can seem like quite a daunting task to say the least!

That's where Shire Direct can really help! Our lender panels are geared to offer a comprehensive selection to enable us to be able to provide the most appropriate scheme for you, and we are confident that you will find our approach to be slick and pragmatic, helpful and friendly. Naturally our mortgage experts are all professionally qualified, and will carefully assess your circumstances, needs and aspirations, and come up with just the right mortgage product for you!

As specialist mortgage brokers, we do have a range of schemes to help, even in the trickiest of circumstances! So, do give us a call if you think you may have difficulties, as we can often arrange mortgage funding where others fail. We'll provide you with a rapid in-principle decision, and we work closely with the lender, solicitor and property valuer to ensure we achieve a suitable offer of mortgage as quickly as possible for you.

Advice and service always come first at Shire Direct...

We pride ourselves in providing our customers with a personal and tailored service, it may sound old fashioned, but it's a refreshing approach particularly with something as important as your mortgage! It's a priority for us, and a glance at a selection of our customer's kind words on our Customer Testimonials page, about our service, simply underlines our commitment. Efficiency and good old-fashioned customer care are still a priority, and won't be a thing of the past here at Shire Direct!

So, why not contact us for a rapid in-principle decision. Either call us on Freephone 08000 282 281 (lines open 7 days a week from 8am until 10pm), or alternatively enquire online at any time, it's quick and easy to do! In either instance, we assure you of a warm friendly and non-judgemental welcome.

That wraps up our look at Offset Mortgages, for further information...

So, that concludes our look at the Offset Mortgage, and how Offset Mortgages work, we hope you found it to be useful and that we managed to answer any initial questions. Remember, there is much more useful mortgage related information throughout the pages of this website, so why not put a little time aside to explore some of the possibilities that could be open to you, and don't forget we're only ever a free telephone call, or couple of mouse clicks away and would love to hear from you!

The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.

There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.

THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

Adding existing debt to your mortgage will increase the repayment term and overall cost.

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A look at Offset Mortgages, and how Shire Direct can help arrange an Offset Mortgage!