Advantages and Disadvantages Offset Mortgages
2008 December 29
The offset mortgage is very similar in most ways to a flexible mortgage. The main difference is that your savings and mortgage are held within one account. Your savings are then offset against the mortgage which means you only get charged interest on the balance. The savings ca be withdrawn at anytime.
While the offset mortgage sounds good it’s only of value to those who maintain a significant consistent amount of savings.
The benefit of such mortgages can sometimes be outweighed as they charge slightly higher rates of interest than the lenders standard variable rate. Although due to competition lenders sometimes will offer offset mortgages at fixed discounted or capped rates.
| Advantages | Disadvantages |
| If savings are significant a large reduction can be made over total interest paid. | Sometimes a set up fee is required. |
| Careful shopping around or good advice can lead to fixed or discounted rates. | Only beneficial for those with savings. |
| Savings can be bigger than capital made investing savings in other savings accounts. |
