It’s everyone dream – to be debt free and to be able to spend all your money on you and your family rather than on servicing debt. But how is that possible in the 21st century? A good place to start is by taking out an offset mortgage.

An offset mortgage works by using the security of a cash lump sum so as to lower the rate of interest on a mortgage. So if you have a £200,000 mortgage, but have £20,000 in savings then you only have to pay the interest on £180,000 of the debt. That may sound like a lot of interest to pay, but that could be a considerable saving each month and of course, the more you add to the nest egg, the lower the rate.

This means, with some good money management you can overpay on your mortgage. Overpaying is essentially paying too much interest each month, and with some mortgages it is not allowed. But with an offset loan it is encouraged – if you continue to pay what you would have if you were servicing a £200,000 loan rather than pay the cheaper £180,000 rate then that extra money is paid onto the debt, and reduces it.

This takes a good level of money management, and a certain amount of dedication – but to be completely debt free will take both of them and more. Offset just allows it to happen relatively pain-free.

Talk to an offset mortgage expert about what it would take to reduce your mortgage. They will help you organise a budget and will help you project how you would manage with a loan reduction plan. It sounds challenging, but if you are serious about building up your equity then a good offset mortgage expert will help you at every step of the way.

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