If you’re hoping to be able to pay off your mortgage early, an offset mortgage can be one way of doing so.

Offsetting your savings or current account deposits against your mortgage debt is becoming increasingly more popular, not least because it is seen as an effective way of paying off your mortgage ahead of schedule and reducing the cost of borrowing.

Nowadays, many mortgage borrowers also have some savings, so, using this money to cancel out part of the mortgage debt while avoiding having to pay tax on the interest that the savings deposits would have earned, makes sense for many people.

With a Current Account Mortgage (CAM) your current account balance is offset against the outstanding balance on your mortgage, eg, if you have an outstanding mortgage balance of £150,000 and a current account balance of £5,000 your mortgage interest will be based on an outstanding balance of £145,000 which will show in your account as being £145,000 overdrawn.

You can also add any savings into the account to reduce the outstanding balance, or transfer other debts, such as personal loans or credit cards, to the account.

Other offset mortgages allow you to keep the deposits separate accounts, but these accounts would still need to be linked for the purposes of calculating interest.

Some offset deals even allow you to draw down more funds and make lump-sum overpayments without incurring any penalties!

With both of these mortgage schemes, borrowers pay interest on the amount of the mortgage, less the amount of the savings, so the savings are ‘offset’ against the mortgage.

If you would like more information about Offset mortgages, or any other mortgage or remortgage products, please call 0845 257 9301, or complete our brief questionnaire and one of our qualified mortgage advisers will get in touch to discuss you mortgage requirements.