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OFFSET MORTGAGE - THE OPTIONS

You can choose from one of two options:

Option 1: Term Reduction

With this option, your offset savings help you to pay your mortgage off earlier. However, offsetting won't have an impact on your monthly mortgage payments. Instead, the interest you save by offsetting your savings means you pay more of the mortgage back each month. Your mortgage balance should reduce faster, and you may be able to pay your mortgage off early.

Term Reduction Summary table

In this example, the mortgage will be repaid four years earlier, saving you 48 payments of £758. In total that is £36,402 less to repay. Plus, unlike a regular savings account, you pay no tax on the money held in an offset account. The future tax treatment of offset savings accounts may vary.

Mortgage Repayment Curve graph

Option 2: Payment Reduction

With this option, you will be using your offset savings to benefit from lower monthly mortgage payments now, but you won’t pay off your mortgage any sooner. Interest saved each month will be used to reduce the amount of your next month’s mortgage payment, so the more savings you offset, the lower your monthly payment will be.

As you are using your savings to benefit from lower monthly payments immediately, your mortgage balance and remaining mortgage term will not reduce any quicker than if you were on a traditional non-offset mortgage.

Payment Reduction Summary table


If you'd like to find out more about our Buy to Let Offset Mortgage, please click here.


Representative example:

A mortgage of £114,600 payable over 13 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 4.89% would require 23 monthly payments of £858.01 and 133 monthly payments of £973.99, plus one initial interest payment of £237.93.

The total amount payable would be £150,786.83 made up of the loan amount plus interest £34,912.83, 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 4.5% 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 image for the Dawkins Offset Mortgage

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Epsom
Surrey KT17 4NL
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