What is an...

Offset Mortgage

An Offset Mortgage allows your savings to be factored into your mortgage and reduce the balance of your mortgage overall. To do this you must have a savings account and a mortgage with the same lender.

The concept took off in the early nineties, with two basic types of offset deal. The first offset mortgages launched in the UK were current account mortgages (CAMs), linking a homeowner`s current account with the mortgage. The second type of offset is where the deposits are kept in separate accounts or 'pots', but linked for the purposes of interest calculation.

With an offset mortgage you are given the option of lowering your monthly repayments, or reducing the amount of your mortgage overall. It is up to the borrower to decide which makes most financial sense for their circumstances overall.

How will an Offset Mortgage show on my Credit Report?

An Offset Mortgage will be reported on your Credit Report in much the same way that other mortgage products such as Interest Only or Repayment are. The term, monthly payment, current balance and monthly change will show, as well as a detailed summary of how repayments have been made.

You can see the status of any mortgage you currently have, or any mortgage account that has closed but is still being reported, by checking your report yourself.

checkmyfile provides the most detailed Credit Report there is in the UK – taking data from the three main Credit Reference Agencies and presenting it together in the same easy-to-understand format. You’ll be able to see what a typical lender would see and get expert help, should you need it.

It’s free for 30 days, then £14.99 a month until cancelled, which you can do online at any time without fuss.

Do I qualify for an Offset Mortgage?

The two key elements you’ll be assessed for are creditworthiness and affordability. Even where you are using savings to offset the cost of your borrowing, your Credit Rating will play a large part in whether or not you are accepted. Each lender will have its own criteria on both acceptance, but by ensuring that your Credit Report is in the best shape it can be, you can certainly improve your chances.

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