Offset Mortgages
A flexible mortgage linked to a current and/or savings account held with the lender. These are sometimes referred to as Current Account Mortgages (CAM). These mortgages take the benefits of the flexible mortgage and use the funds held in the current and/or savings account to offset the interest e.g. on a particular day a borrower has a mortgage balance of £50,000 and has £2,000 held in their current and/or savings account. The customer is charged mortgage interest on £48,000 i.e. the mortgage balance minus the positive balance held in the current and/or savings account.
Borrowers should note that when using the money held in their current and/or savings account to offset their mortgage, they will not receive interest on the credit balance held in the accounts.
Some of the lenders in this sector are also incorporating credit cards and personal loans into the mix.
For a borrower wanting one home for their finances this is an attractive option.
