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Are Offset mortgages a good option right now?

Journalist: Jake Carter, Mortgage Introducer

ended 17. November 2022

This story seeks to understand whether Offset mortgages are good option right now considering market conditions.

What opportunity do Offset mortgages present customers given market conditions?

Would you recommend Offset mortgages to your customers? If so, why?

Given that Offset mortgages present an opportunity for customers to save long term, have you seen an uptick in demand?

4 responses from the Newspage community

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Natalie Hines
Founder at Premier One Mortgages
An offset mortgage for the right client can be the right choice in any market conditions. I have recommended offset mortgages whilst rates are low and in the past week as rates have increased. Everyone's circumstances are different but for someone looking to offset savings against their mortgage, it's a way to reduce the amount of interest they pay on their borrowing. People need to be aware that they cannot receive interest on the savings whilst offsetting, but as there is no tax to pay on the savings it can be tax-efficient, especially for higher rate tax payers.
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Mike Staton
Director at Staton Mortgages
If a client has enough savings then an offset mortgage is always an option that should be explored, even more so with increasing rates on mortgages not being echoed by saving rates. In these cases, your money may well be better off in an offset account. As with any mortgage, it will depend on the borrower's own individual circumstances, including their future plans. Having £100k in savings now may be great if you have an offset mortgage, but if you are intending to use that money soon then it could defeat the object of having this type of mortgage as they do tend to come with slightly higher rates. If you are exploring this avenue, make sure you are getting advice.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Offset mortgages could be the best value they have ever been at present as the gulf between rates on borrowing and savings widens. Savings that would have produced near no interest can offset your mortgage rate that has been increasing rapidly over the lpast six months. The flexibility offset mortgages provide is a rare thing in times of recession, so maintaining these facilities is a real benefit. I expect demand for offsets to rise, but lenders will start becoming reluctant to offer them.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
Offset mortgages are a powerful tool for those who have savings or a decent amount of money flowing through their accounts each month, as every penny held in the offset account is a penny of your mortgage you are not paying interest on. Most, but not all, offset deals then give you the choice of either utilising this feature to help you reduce the term (so your repayment stays the same), or by reducing the monthly payment (so the term remains the same). I talk to lots of my clients about this, as many are self-employed barristers and so have large amounts on deposit to pay their tax bills and VAT. Having these funds in an offset account is ideal as they can benefit from reduced interest on their mortgage and still have instant access to the cash for when it's time to pay HMRC.