What Offset Mortgage Providers Have To Offer

You will know many if not all of the offset mortgage providers in the UK today. They are the banks and building societies that you have grown up with and see on your high street. You probably have bank accounts, credit cards and savings accounts with the very institutions. But these customer-facing institutions are also creators of complicated and innovative offset mortgages, distributed through mortgage brokers. But what do they have to offer? And what can offset mortgage providers do through brokers that they cannot do through their branches?

To understand what the offset providers do, it's best to know what offset does first. If a borrower has a current account, a credit card with an outstanding balance, a mortgage and an active savings account, the borrower would usually earn next to nothing on the current account and a small amount of interest on the savings account. Interest on the credit card debt would be charged at around 14% or 15% and the borrower would pay the standard rate of mortgage interest. What offset mortgage providers do is offer a way to link all of those accounts for the benefit of borrowers.

There are many differences in the types of deals offered by offset mortgage providers. The simplest offset mortgage deals link a savings account and a mortgage account, but more complex offerings let offset mortgage holders have the full variety of banking functions, with savings, loans, credit cards, current accounts and a mortgage all rolled into one. Depending on the type of offset mortgage these accounts might remain separate or borrowers might have a single account. This option is not for the faint-hearted as with a single account borrowers will have an overdraft that could run into hundreds of thousands of pounds. But by going through a broker first, the products offset mortgage providers offer needn't be scary.

Most offset mortgage providers offer the flexible features that make mortgage offset deals really attractive. These include the facility to overpay on your offset mortgage, underpay, take payment holidays and redeem the offset mortgage early, all without penalty. Some offset mortgage providers impose terms and conditions. For example, offset mortgage providers may not allow borrowers to use the underpayment facility until they have overpaid. However underpayments and payment holidays could increase the mortgage term and/or the total amount payable.

Borrowers who are looking for innovative offset mortgage providers won't be disappointed. Offset mortgages of this type allow borrowers to link the savings accounts of their friends and family to their offset mortgage. Family members get the satisfaction of helping borrowers, while borrowers benefit from increased offsetting and lower mortgage payments.

Some offset mortgage providers are also flexible with the way offset savings are managed, allowing different savings pots within a single account and allowing some or all of those pots to be offset against the mortgage. With some offset mortgages, borrowers can also borrow against the equity in their homes for home improvements, holidays and other major expenses. Bear in mind, though, that these loans will be secured on the home, so it is even more essential to keep up offset mortgage repayments.

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