How To Get Flexible With Offset Mortgage Providers

One of the first offset mortgage providers in the UK was Richard Branson's Virgin, well known for bringing innovation in many sectors. As the first of the offset mortgage providers, Virgin set the standard for the mortgage offset deals that followed. The offset principle was that people should only pay interest on the total amount of debt they owed. If they had savings, then they had less debt.

For example, 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 per cent (the UK average) and the borrower would pay the standard rate of mortgage interest. What offset mortgage providers did was 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 fainthearted as with a single account borrowers will have an overdraft that could run into hundreds of thousands of pounds.

Flexible Offset Mortgage Features

Most offset mortgage providers offer the flexible features which 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 could consider family offset mortgage deals such as those offered by the Yorkshire Building Society and others. 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, such as the Woolwich and its parent company Barclays, 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.

These are just a few of the deals offered by offset mortgage providers. With the market booming, and new offset mortgage products every day, there's never been a better time to consider an offset mortgage. Our panel of professional offset mortgage brokerages have details of all the latest deals available from offset mortgage providers.

However, please note that The Offset Mortgage Centre cannot advise on or arrange mortgages from the Yorkshire Building Society or Barclays.

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