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OFFSET MORTGAGE - HOW IT WORKS
You may not be aware of how an offset mortgage works, in which case you could be missing out on a great opportunity to benefit from lower monthly payments or reduce the term of your mortgage, saving £1000s in interest payments.

An offset mortgage works in a similar way to a standard mortgage, except for the inclusion of an extra feature, a savings account is attached to the mortgage arrangement. Any money placed in the savings account is automatically deducted from the amount of the mortgage on which interest is charged.

This means you can enjoy one of two distinct benefits:

If you borrowed £200,000 and held £40,000 in our Offset Saver account, you are only charged for the interest which would be due on £160,000. That means by maintaining your payments at the agreed level you are effectively paying back more of your mortgage each month and that can have a dramatic effect on how quickly your mortgage is paid off.

Alternatively, you can decide to benefit from lower monthly payments. This won’t pay off your mortgage any quicker, but will make your monthly payments lower.

In addition, you can overpay your mortgage regularly each month or from time to time and that extra credit can be used to reduce your payments at a later date.

How Offsetting Works

If you are interested in our Buy to Let Offset Mortgage, please click here.

Representative example

A mortgage of £168,000 payable over 20 years on a discounted variable rate for 2 years at 2.45% below our variable Managed Flexi Mortgage Rate and then on our variable Managed Flexi Mortgage Rate, currently 4.64% would require 23 monthly payments of £865.08 and 217 monthly payments of £1,055.65, plus one initial interest payment of £313.04.

The total amount payable would be £250,559.93 made up of the loan amount plus interest £81,285.93, an application fee of £175 which includes the valuation fee, product fee of £999 and a mortgage exit fee of £100.

The overall cost for comparison is 4.3% APRC representative.
THE MORTGAGE WILL BE SECURED ON YOUR HOME 

 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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Case Study Offset Mortgage
Family Building Society
Ebbisham House
30 Church Street
Epsom
Surrey KT17 4NL
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