WHAT IS MORTGAGE OFFSET ?
Mortgaging a property in UK is considered to be a complex affair and it requires an expert to handle each of the procedures of the process with extreme precision. A mortgage expert can help a mortgage borrower to get the required amount of mortgage for buying a property. There are certain operations that if conducted can fetch several benefits to the borrower. This piece of article talks about one such operation in the process of Mortgage known as Mortgage Offset. Let us know more about Mortgage Offset.
Offset Mortgage in UK is a unique type of Mortgage which is linked to the savings account of the borrower. Offset Mortgage is one of the top choices of the borrower as it reduces the financial burden of the hefty mortgage.
Who can opt for Offset Mortgage ?
An Offset Mortgage is suitable for the borrower who is self-employed or earns decent enough so that his/her account always has a good balance left in it. Please note that the number of funds in your bank account will not be used in the repayment of the mortgage but will be used in a different manner. Let us now see how well the Offset Mortgage works and benefit the borrower.
Working of Offset Mortgage
In the traditional system of Mortgage, the borrower repays the mortgage monthly along with some amount of interest. While in Offset Mortgage, the savings account is linked with your mortgage. With having your savings account linked as an Offset Account, the savings will be set as per your outstanding loan, and hence, the interest that a borrower has to pay gets reduced.
Let us be clearer with the help of an example. Suppose a borrower has a £500,000 mortgage and £50,000 in your savings. Then with the provision of Offset Mortgage, £50,000 in your savings will be used to decrease the amount of the mortgage and now the owed amount will be equal to £4,50,000. Thus, the borrower will be paying less interest against the outstanding loan.
