Should you be looking towards offset mortgage arrangements?
Over the last few months is has become apparent that UK savers have been earning paltry interest on their nest eggs while paying out mortgage interest well above UK base rates. This has brought into play one area of the mortgage market which many people may be unaware of which is the offset mortgage deal. So what exactly is an offset mortgage arrangement?
In simple terms the offset mortgage deal allows you to bring your savings into play and effectively collate your mortgage debit and your savings into one account. Ultimately, while the balance may well rise and fall in tandem with your financial requirements, you will pay less interest as long as you have savings to contribute to your overall balance. With UK savings rates far lower than mortgage interest rates in effect your savings, under the right tax arrangements, can effectively reduce your overall mortgage interest payments.
However, before you consider changing your mortgage arrangement it is imperative that you take professional financial advice to ensure you are taking the right course of action for your particular situation and you are fully aware of the consequences. For the vast majority of people in the UK, a mortgage will be the largest amount of debt they will take on in their lifetime and is something that should be monitored on a regular basis.
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