Is 2010 the year of the Offset mortgage?
Offset mortgages are not right for eeryone but the flexible nature of offset mortgages can offer a number of key advantages to mortgage holders.
Advantage 1: The money is ready when you need it. Unlike most standard mortgages, an offset mortgage can allow you to access pre-approved borrowing via a “drawdown facility”. This facility enables you to withdraw funds at a time of your choosing which can be particularly useful for property investors, who can use these funds to purchase additional properties in the future. A key benefit of offset mortgages is that mortgage lender’s will only charge interest on pre-approved borrowing once the funds have actually been drawn down. This means property investors can wait until they have found a property they wish to buy before drawing down these funds, meaning they can save themselves many months of unnecessary interest payments on funds they are not yet ready use.
Advantage 2: Save money on interest payments. Offset mortgages work by allowing you to offset your credit balances on some accounts against the debt balances on others. For example, if you have an outstanding mortgage loan of £100,000 and you have £40,000 in savings, an offset mortgage will allow you to pay interest only on the total amount of debt. This means that you will pay interest on £60,000 instead of on the full amount as with a standard mortgage.
Advantage 3: Opportunity cost of re-investing this extra capital. Offset mortgages allow you access to your money meaning you are in a position to take advantage of any investment opportunities that you believe will generate you a larger return than the rate of interest you are paying on your mortgage.
Advantage 4: The balances held on deposit are not liable for tax on the interest you are offsetting, meaning that you would recieve your mortgage interest rate as your actual net rate of return.
Want to find out more? then contact us on 01438 726464 or via our contact us page.
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Prior Knowledge
Caxton Point
Caxton Way
Stevenage
Hertfordshire
SG1 2XU
Tel: 01438 726464 |
