Offset Mortgages

The use of an offset account in conjunction with your mortgage can be an effective way of reducing the interest chargeable and as a result the term of your mortgage.

An offset account is a savings account that allows you to retain easy access to your cash deposits (typically a withdrawal can be made within 3 days). The balance of savings in the offset account effectively reduces the balance of your mortgage.

For example a borrower with a mortgage of £200,000 and offset savings of £30,000 will only be charged interest on the balance of £170,000. Although you do not gain interest on the offset deposit your effective return will be equal to your mortgage interest rate. This can be advantageous given that mortgage interest rates are often higher than general deposit savings rates. The arrangement is made even more attractive when you consider that tax is not payable on offset savings.

Offset accounts can be ideally suited to Self–employed individuals who need to save regular cash deposits for their tax liabilities. PFM have extensive experience of advising on mortgages with offset accounts.

Practice Financial Management Limited is authorised and regulated by the Financial Services Authority. For more details please refer to About PFM / Regulations. Your home may be repossessed if you do not keep up repayments on your mortgage.