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What’s an Offset mortgage?

Enable’s IFAs of Bishop’s Stortford have noticed that even though the number of offset mortgage products available in the market has fallen in the last 12 months, average rates have fallen too. This makes these types of mortgages highly competitive. If you are looking to renew your mortgage Enables are waiving their fees until 31st May 2020 essentially offering a free mortgage application for remortgages.

So what is an offset mortgage? It essentially allows borrowers to link their mortgage and savings. By doing so it reduces the interest paid on the mortgage while continuing to allow access to savings. With an offset mortgage, the reduction of the interest paid on the mortgage depends on the size of funds in their savings account.

 “As savings rates continue to fall, and with the current circumstances meaning they are likely to continue doing so for the foreseeable future, getting a decent return on any nest egg may seem a distant dream for many.” Says Eleanor Williams, finance expert at Moneyfacts.co.uk.

“With rate margins so low, mortgage providers are keen to show that they offer a diverse range of products to appeal to as many borrowers as possible. While the number of offset deals available has reduced over the last 12 months, the rates themselves now seem to be keeping pace with the competition we have seen across the wider, mainstream mortgage market.”

“Once on the property ladder, the main aim for many is to pay their mortgage balance off as quickly as possible. As a general rule, if a borrower’s mortgage rate is higher than the interest rate they are currently earning on their savings, then they may find that they can save more by repaying their mortgage than they would receive in savings interest, particularly if they pay tax on the latter.”

Enable’s experienced IFAs are happy to talk you through any of your remortgaging, savings and borrowing financial decisions to help you find the best solutions and deals for you.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage


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