Barclays Bank recently revealed that it’s share of the UK new business mortgage market leaped from 6% to 26% during the first half of 2008. A change in marketing strategy by Barclays owned Woolwich was cited as the main reason for the dramatic improvement.
Offset mortgages are becoming more popular as familiarity increases. They rely on mortgage borrowers having an amount of savings that they then ‘offset’ against the negative balance of the mortgage loan. This calculation is done each day, with mortgage interest charged on the net balance.
Offset mortgage example:
£90,000 net mortgage balance (100K minus 10K)
As interest is only charged on the net mortgage balance of £90,000 you do not receive any interest on the savings portion. The big advantage with offset mortgages is that the interest you save by offsetting does not attract any income tax, unlike money held in a deposit account. Keeping a regular amount which is used to offset the mortgage balance can dramatically reduce your mortgage term, enabling the loan to be repaid much quicker.
If you would like to discuss offset mortgages in more detail please visit our website http://enhancedwealth.co.uk/mortgages/index.htm or call 0800 316 5756.