Offset mortgages
Are offset mortgages returning?
What are you recommending to clients that may be interested in this product type?
What are the key benefits of offset mortgages over other options in the current climate?
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3 responses from the Newspage communityCopy all
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Because interest rates have risen dramatically, those with savings are eager to learn more about offset mortgages. If you do have funds to offset, you could save thousands in interest payments and cut years off your mortgage term. Banks have also been slow to pass on rate increases to savers so not receiving credit interest on your savings in favour of saving money on your mortgage can be appealing. However, if you do not take advantage of offsetting, you may have been paying a premium for having the facility versus other products available in the market.
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Many of my clients are Barristers, a profession that is predominantly self-employed as sole traders and who generally hold large amounts of cash for future VAT and income tax liabilities, which makes an offset mortgage an ideal tool for them. There are not many saving accounts offering clients upwards of four percent interest, tax-free, with instant access, but that is essentially what an offset mortgage is giving you. It's not all sunshine though; offset mortgages generally carry a premium on their interest rate, so you have to be sure that the benefit outweighs that additional cost.
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An offset mortgage for the right client is a fantastic product. I always ensure I discuss the benefits of an offset as many clients aren't aware of the features and potential savings offsetting can have. It very much depends on how much you owe on the mortgage and the amount you have in savings as to whether an offset is a suitable product but a mortgage broker will always be able to give you advice on what is best for your personal circumstances.