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Flex Forward
If you don't know much about offset mortgages, I think you should take a look. They offer greater flexibility than conventional mortgages and they could also help you pay off your debt more quickly.
So how do they work?
You set up a savings account with your mortgage lender and the savings account is linked to your mortgage account. As a result, any savings you have don't earn interest; your savings are used to reduce the balance of your mortgage.
That's an attractive concept for three reasons:
- mortgage interest rates tend to be higher than savings rates, so your savings are generating a higher return for you
- you have flexibility. Your savings can be used to reduce your mortgage bill for a while but can easily be switched to somewhere else if they're needed.
- offset mortgages offer some tempting tax advantages.
So if you had a £100,000 mortgage with £10,000 in the savings account, you would only accrue interest on the £90,000 portion. And you won't pay any tax on the reduced mortgage interest that you pay.
