Getting a poor return on your savings? Consider an offset mortgage
An offset mortgage works by using savings you have to reduce the amount you owe on your mortgage and therefore the amount of mortgage interest you pay. For example, if you have an outstanding mortgage of £120,000 and savings of £20,000, you would only pay interest on a mortgage of £100,000. You dont receive interest on your savings, but that also means that you dont pay tax on that interest.
This tax benefit, added to the fact that mortgage rates are typically higher than savings rates, means that you could save thousands of pounds in interest with an offset mortgage. Taking a mortgage rate of 3.99%, a basic rate taxpayer would need to earn at least 4.99% from a savings account to get the equivalent benefit. A higher rate taxpayer would need to earn 6.65%.
You could also cut years off your mortgage term by using the saving to make regular overpayments.
Richard Morea, Technical Manager at L&C said, If you are frustrated with the low interest rates you are earning on your savings in the current market, then an offset mortgage is worth considering. They are not suitable for everyone, but if you have a decent amount of savings, offsetting them against your mortgage could save you thousands of pounds in interest.
Notes to Editor:
London & Country (L&C) is the UKs leading no-fee mortgage broker. Based in Bath, it provides whole of market advice via telephone and post to clients nationwide. As well as residential mortgages, it also specialises in the Buy-to-Let and adverse-credit sectors.
L&C is a Climate Neutral company and for the last seven years has invested in climate friendly projects and tree-planting to help offset its emissions and those of its customers. For more information, go to http://www.lcplc.co.uk/green.
L&C has won numerous awards including:
Best Mortgage IFA/Adviser of the Year Money Marketing, 2004, 2005, 2006 and 2008
Best Technology Adviser Money Marketing 2007
Best Mortgage Broker outside London Mortgage Strategy, 2004 and 2005
Best National Broker Mortgage Introducer 2005, 2006 and 2007
Best Overall Broker Mortgage Introducer 2005
Overall broker of the year Pink Home Loans, 2006 and 2007
Top 100 company in the Sunday Times Fast Track 100 for 2004 and 2005
Business of the Year The Bath Business Awards 2005
Growth Strategy of the Year National Business Awards (Wales and West) 2008
Business Leader (Broker) British Mortgage Awards - 2008
Online Mortgage IFA of the Year Financial Adviser - 2008
Richard Morea, Technical Manager
Office: 01225 341312
Mobile: 07970 885168
David Hollingworth, Head of Communications
Office: 01225 341211
Mobile: 07710 634044
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