Offset mortgages Good Practice Guide

How offset mortgages can enable clients to take control of their mortgage and make their savings work harder, by using them to reduce their outstanding debt.

An offset mortgage puts your client in control of their homeloan. It links their savings account to their mortgage account.

This enables them to effectively overpay their mortgage without losing access to their money. By doing so, they can either reduce their ongoing monthly repayments or cut their mortgage term, depending on the product and the client’s preference.

This benefit occurs because, by offsetting savings against their mortgage, they are effectively making an overpayment.

This means the outstanding capital debt reduces and therefore less interest is charged on this smaller debt. Over time the impact of this can be significant, saving thousands of pounds in saved interest and potentially years off a mortgage term.

It’s the same benefit your client gets from overpaying their mortgage, but what stands offsetting apart is that they are only ‘effectively’ overpaying. And this can be very appealing to clients.

To help understand more about what offset mortgages are, this Good Practice Guide will examine the following:

  • What offset mortgages are
  • Background to the sector
  • Benefits of offsetting
  • Drawbacks of offsetting
  • Appropriate clients for offsets
  • Good practice tips

Read the full Good Practice Guide here

Credit: Society of Mortgage Professionals, Scottish Widows

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