What is an offset Remortgage?

An offset remortgage is a flexible remortgage deal that links together your current account, savings and mortgage. Each will have their separate accounts, but when the interest is calculated any savings you have will be offset against the remortgage balance. For example, you may have borrowed £50,000, but have savings of £20,000. Any interest will therefore only be charged on £30,000 (the amount after your savings have been offset).

Advantages of an Offset Mortgage

• If used effectively, you can pay off your mortgage faster.
• All of your debts are consolidated into a single loan, which willlower your monthly payments and help you pay off your debt faster.
• You still retain complete control over individual accounts.
• Offset mortgages are flexible remortgages which allow vary your monthly payment depending on your current circumstance. For a more detailed discussion on flexible mortgages go here.
Since you do not earn any interest on the your savings and current account, you do not pay any taxes on the interest you would have earned.

Disadvantages of an Offset Mortgage

• If you have a relatively small savings account, there are not much benefits.
• Any money in your savings and current accounts will not earn any interest.
• Offset remortgages are flexible remortgages which generally carry a higher interest than other remortgage deals because of added flexibilty.

Should I Get an Offset Remortgage?

If you have a substantial amount of savings that can offset your mortgage account, require the felxibilty of a flexible remortgage, and would rather keep your savings liquid and at hand (as opposed to paying down your mortgage), then an offset remortgage deal is right for you. It is particular advantagous to borrowers with varibale income streams, because it enables them to keep money at hand in case they should ever need it right away.