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The way most mortgages work is pretty straight forward – you take out a loan with a mortgage lender and over time you repay that loan at a premium. But offset mortgages do not quite work in the same way.

Regular mortgages are secured loans which means they are a money loan secured on a home. That’s why it is quite cheap to borrow hundreds of thousands of pounds – a lender will give someone a loan for 3% or 4% because they know that should that borrow stop paying the mortgage, they can simply take the security, the home, and be reimbursed.

Offset mortgages use this idea and twist it, creating the strangest mortgages in the UK – mortgages that actually help people save money.

Because offset uses that idea of security and builds on it. With an offset mortgage, you secure lump sums of cash alongside the property, in affect making you a safer borrower because the lender knows that should you stop paying your mortgage then there is a property AND a cash lump sum to take back from. So they are happy to offer a cheaper rate, thanks to that added security.

And the more security you amass against the debt, the cheaper the loan becomes.

So if you keep increasing that lump sum, month by month, the rate at which you have to pay back your loan becomes cheaper and cheaper – thus offset is the only mortgage that can save you money each month.

Talk to an offset mortgage adviser about using your savings for more than just the tiny returns they are making right now – invest your home and your money into the strangest and most rewarding mortgage in the UK.

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