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Offset mortgages

Journalist: Anna Sagar, Mortgage Solutions / Specialist Lending Solutions

ended 29. October 2022

Looking to speak to brokers about offset mortgages. 

  1. Are you seeing more people enquiring about offset mortgages? Do you think this could grow?
  2. When would you recommend them to a client?
  3. What should customers keep in mind with this type of product? 

4 responses from the Newspage community

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Editor
Riz Malik
Independent Financial Adviser at R3 Wealth
Offset mortgages, introduced to the UK over 20 years ago, were the last real innovation in the mortgage market. Given the growing spread between borrowing costs and the return on savings, offset mortgages could return to popularity for those with large savings balances. The benefit of offset is that you can benefit from saving money on your mortgage but do not lose access to the funds. The number of lenders offering offset has diminished over recent years but used correctly can reduce the term of your mortgage. However, it is important to be realistic as to how much you are able to offset as there has been a premium on these products when compared to conventional mortgages.
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Aaron Strutt
Product and Communications Director at Trinity Financial
The choice of offset mortgages seems to have been reduced quite drastically over the last few weeks but they are still a decent option for some borrowers keen to make use of their savings. Family Building Society, Barclays, Accord Mortgages, Scottish Widows, Coventry and Coutts are the most prominent lenders offering them. For many borrowers it would be appealing to pay off a chunk of their mortgage but still have access to the funds in case they need them again. There has been a shift where people want to pay down their mortgages rather than take them out, although this is not a luxury available to most. Offsets are not really worth taking unless you want to make use of them. If you do not put sufficient funds into the linked accounts for a long enough period, you might as well take a standard mortgage and use the overpayment facility.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
Offset mortgages are an excellent, if very underrated, financial planning tool. Using your savings to help reduce the interest paid on your mortgage, whilst having full access to the savings if you need them, is a very powerful way to use your money.
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Jonathan Burridge
Founding Adviser at We Are Money
Offsets are not popular even though we have regularly discussed them with clients. Over the last decade there were obvious benefits comparing interest rates on savings verse saving interest costs on a mortgage. Part of the issue is that these products are often priced at a premium and when you compare the savings of offsetting against standard products there is very little in it. Many customers do not have the cash savings available to see significant benefit. Current Account mortgages are similarly unpopular. These products are valid but generally for a small cohort of clients.