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Offset mortgages allow you to take advantage of your savings without actually spending them on
your mortgage. With an offset mortgage, any savings you have are held against the debt of your
mortgage, so that the former partially cancels the latter. For example, if you have £10,000 in
savings and a £100,000 mortgage, an offset mortgage would allow you to only pay interest on
£90,000
A true offset mortgage holds your borrowings and savings separately, unlike a current account mortgage,
which combines them into one pot, so to speak. The most obvious benefit of an offset mortgage over a current
account mortgage is that any savings you have in a cash ISA can be offset against the mortgage without
having to close down your ISA; when you’ve paid off your mortgage, you’ll still have your ISA tucked
safely away. One drawback: offset mortgages tend to have slightly higher interest rates than other types
of mortgage.
