Remember Me
forgot your password?

Offset Mortgages: a Brief Introduction

The principle behind the offset mortgage is simple. Interest payments on savings contribute to reducing, or offsetting, the amount owing. Seven years ago there were only a handful of providers but the idea has taken root and there are now more than 40. Market analysts anticipate a further increase in the coming years.

The reason for this growth can be explained by considering the benefits of offset mortgages. In general, offset mortgages come with good competitive interest rates. These competitive rates are often attached to further flexibility in that the customer can make an over- or underpayment without incurring a penalty. However, the key benefit to those with something set aside in the bank relates to the savings that can be made on the total amount owing. This can be dramatically reduced. For example an offset customer with a combined mortgage and ISA account who has a property mortgaged to the tune of £175,000 can reduce the term of payment by 5 years and save around £80,000 in interest payments merely be paying an extra £50 a month into the combined account.

In Britain, interest generated by current account savings is taxed as income by the government and since 1983 the rate has been 20%. However since an offset mortgage works as a kind of combined account this rule does not apply. And this means big savings can be made.

Really, offset mortgages are an exciting product well suited to those who can afford to make occasional overpayments (i.e. when in receipt of an annual bonus). These are the customers who stand to gain the most from the tax incentives associated with offset mortgages. In this respect, providers of these mortgages are also actively looking to win the custom of entrepreneurs.

15.4.2008

Mark Lauterwein

Mark Lauterwein is a UK based writer. He is currently writing articles on a variety of subjects.

Rate this Article: 0 / 5 stars - 0 vote(s)
Print Email Re-Publish


Article Source: http://www.articlesbase.com/finance-articles/offset-mortgages-a-brief-introduction-392297.html
Add new Comment



Captcha

  • Latest Finance Articles
  • More from Mark Lauterwein

How to Get Debt Relief Help Today - Pay Off Credit Card Debt Now

By: Bryan Burbank | 06/07/2009
You can get very stressed out when managing your credit card debt because it seems like the bills get harder to pay each month. A lot of the credit card companies are raising there rates so they can make more money but it is causing a lot of people to not be able to pay there minimum payments. It is hard enough managing your credit cards because we need to use them when times are tough and we do not have the money we need to buy food and clothes. If you are over your head with credit card debt t

Allocate to Achieve a Goal and Rebalance to Maintain It

By: Shane Flait | 05/07/2009
Entering retirement is a good time to strategize on how best to allocate your resources to achieve your goals. Maintaining your strategy will keep you on track. In this article I'll review the basics of allocation.

How to Evaluate Investment Real Estate Risk with a Scenario Analysis

By: James Kobzeff | 05/07/2009
Discover why the scenario analysis method is favored amongst real estate investors and investment property specialists and how it helps measure investment risk during the process of evaluating rental income property.

Successful Trend Following in Commodity Trading

By: Andrew Abraham | 05/07/2009
The question is do you want to be a winner in the commodity trading arena? Trend following in any arena, especially the commodity trading arena is not easy. Commodity trading probably has to be the hardest easiest thing to do.

America's Oldest Dividend Stocks - Part 1

By: Robert Hauver | 05/07/2009
Ever wonder which U.S. companies have been around the longest? Here's a list that uncovers some beauties and reveals some bowsers.

Real Estate Investors: Where to Find Private Lenders and How to Get Their Undivided Attention

By: Michel Lautensack | 05/07/2009
Discover secrets on how and where to find private lenders for your real estate investment business and get their undivided attention.

How Real Estate Net Present Value Works

By: James Kobzeff | 05/07/2009
Net present value (NPV) is a real estate investing measure widely used by investors. Discover how to use and interpret it for your own real estate analysis.

Property Auction UK: The Demand Continues

By: Parmdeep Vadesha | 04/07/2009
The demand for property auction in the UK is continuously performing well. The appeal of such auctions is attributable to the advantages that both buyers and sellers are able to enjoy when turning to the said method of acquiring and selling properties. Information provided in the following article is testament to the popularity of property auction in the UK.

Gap Year: Over the Hills and Far Away

By: Mark Lauterwein | 02/05/2008 | Travel
A gap year is not only an adventure to enjoy for the moment, it is also the stuff of future memory. Many who have taken time out from their day-to-day routine to gather new experiences abroad recall their adventures as the best months of their lives. And the profile of those opting to do something like this is changing: increasingly it is the older traveller who chooses to take a sabbatical.

Debt Management: Beat Debt? No Sweat!

By: Mark Lauterwein | 23/04/2008 | Personal Finance
So much in debt, you’re running out of bread? Now’s the time to use your loaf!

Debt: Bad Debt Rising

By: Mark Lauterwein | 23/04/2008 | Personal Finance
People in debt get upset. Not planning for this can be a cause of regret.

Edinburgh Hotels: Auld Reekie Comes Up Roses

By: Mark Lauterwein | 22/04/2008 | Travel
Historically Edinburgh was once the capital of a British kingdom that served as a buffer state against the Pictish people north of Stirling.

Solicitors: Clients Value Good Service Above All

By: Mark Lauterwein | 21/04/2008 | Law
A couple of years ago Which? investigated the quality of service offered by solicitors to their clients in England and Wales. The results were dispiriting, to say the least.

Electricity Bills: the Bill Explained

By: Mark Lauterwein | 21/04/2008 | Finance
Utility bills contain a lot of information and the format is not always as clear as it might be.

Credit Cards: Guidelines for Credit Consumers

By: Mark Lauterwein | 21/04/2008 | Credit
When credit card users want to apply for a new card it is best not to approach several providers individually.

Compare Gas Prices: British Gas Raises Prices

By: Mark Lauterwein | 21/04/2008 | Finance
In the first quarter of 2008 British Gas, the major gas supplier in the UK, increased prices to the tune of 15%.

Submit Your Articles Free: Signup


Article Categories




Use of this web site constitutes acceptance of the Terms Of Use and Privacy Policy | User published content is licensed under a Creative Commons License.
Copyright © 2005-2008 Free Articles by ArticlesBase.com, All rights reserved. (0.08, 1)