Mortgage features - various kinds of mortgage features-2

This article is in continuation to the previous article Mortgage features - various kinds of mortgage features. Please read the first part before continuing with this one.

Offset mortgage

With an offset mortgage, your main current account or savings account (or both) are linked to your mortgage and are usually, but not always, held with the mortgage lender. Each month, the amount you owe on your mortgage is reduced by the amount in these accounts before working out the interest due on the loan.
So as your current account and savings balances go up, you pay less on your mortgage. As they go down, you pay more.

Current account mortgage

A current account mortgage is similar to an offset mortgage in that it offsets the balance of your savings against your mortgage. However, in this case, rather than your mortgage and current account being separate pots of money, they are usually combined into one account. This means that the account acts like one big overdraft.

Look at Section 4 of the keyfacts document about this mortgage document to see whether it is a current account or offset mortgage and whether you have to take a current account offered by the lender as a condition of the mortgage.

Is an offset or current account mortgage right for you?

-Possibly, yes, - if you are a higher rate taxpayer, have substantial savings to offset and like the idea of built-in flexibility to make overpayments and underpayments.

-Possibly not, if after paying your deposit you don't have much left in savings and if other mortgages have a lower interest rate or other features that are more important to you.


Top tips
-Read the keyfacts document and use it to compare costs and features of other mortgages available.
-Look for the APR figure alongside the interest rate.
-Use our Mortgage tables to help you compare costs and features of mortgages available
-Don't forget that discounts and special deals are temporary, and rates can go up when they end.

Link to previous article on Mortgage features - various kinds of mortgage features .