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The greatest thing about offset mortgages is that the savings do not stop coming – every single month you will find, if you keep to your spending plans, that your outgoings just become less and less.

Here is an example of how offset can save you money. It’s a bit simplistic, so don’t think it will be quite this cut and dried, but it’s just to illustrate what offset can offer you.

If you have a £200,000 offset mortgage, with £40,000 offset against it then you are only paying for £160,000 for the mortgage. So if that’s a 5% mortgage, your monthly outgoings are instantly reduced from £832 to £666. But it doesn’t end there.

If you plan to spend the £832 a month regardless, then you will overpay by £166 every month. So, after a year you will have overpaid £1,992, and your mortgage will only be £158,008 – meaning your monthly outgoing will become, at 5% is £658. So in just one year, as well as reducing your mortgage, you have saved yourself money every single month. And if you keep overpaying over years, these numbers just increase exponentially – so the longer your offset term, the more you save.

Of course, if you choose to keep overpaying then your mortgage and your rate will fall even more. It’s the mortgage that keeps giving – and depending on the economy you might be ahead of the pack with an offset – if base rate is low then a tracker offset will offer a low rate, and if base rate is higher then you may be able to take advantage of a well-timed fixed rate.

It’s all down to planning, preparation and guidance. This can only come with the help of a mortgage adviser – an adviser will be an expert with offset mortgages, and will be able to explain them in much more detail than above. The adviser will be able to show you ways to increase your offset pot, to link your mortgages to other savings and investments and to invest your savings in a place that will continue to make you money.

To stay abreast of current trends, news and comment on offseting mortgages visit the Offset Mortgage Blog.