Advantages and Disadvantages of Offset Mortgage

Taking out an offset mortgage may sound very lucrative but you need to understand how it works. The interest charged on a mortgage depends on the balance that you have in your savings and current account. If your saving account reduces your mortgage interest rate will increase and vice versa. If you know that you are not going to be touching your savings for a long time and you are prepared to get no interest on your savings account then an offset mortgage may be beneficial. But if you are going to be using your savings sometime in the future then taking an offset mortgage will not make sense. The reason is that you will have reduced your mortgage interest payments, but you will not have got any interest on your savings. When you withdraw your savings your mortgage interest payments are going to increase. So any excess cash that was available will cease to come in. Also your monthly payments will increase. So unless you are saving for your retirement, or have any other form of forced saving that you cannot touch, don’t go for an offset mortgage. You can visit the Intelligent Finance web site to gain a better understanding of flexible mortgages.