Is It Worth Looking Into An Offset Mortgage Calculator To Choose My Repayment Plan?
The wide range of mortgage types and repayment options can seem baffling
, and often using a mortgage calculator doesnt make the process any easier. An offset mortgage calculator can seem to show repayments to be lower and the process simpler but is this the case?Compare mortgage options on a mortgage calculator uk (a number of comparison websites offer a free mortgage calculator) to make sure you have a good idea of what the financial implications will be for any type of repayment option.
If you like the look of an offset mortgage there are a few things you will still need to know. Offset mortgages are flexible mortgages which offset the balance of your savings, or even your current account against your mortgage. The two amounts will be combined to give you an overall view of what you owe. If you have 15000 in savings and an 80000 mortgage, this will be shown in balance as -65000 and this amount will change the more or less that is in your savings.
This will also affect your repayments, as the more that appears to be paid off on your mortgage, the less you will need to pay out. However, is this really as simple and cost-effective as it looks?
Basically, you must expect to pay higher interest rates for an offset mortgage than for standard mortgages. This is because the lender will still want to make money on your borrowing, and you get the added advantages of flexibility, which you need to be prepared to pay for. Offset mortgages also tend to have variable rates, which will change with the Bank of Englands base rate, making it more difficult to predict what you are going to owe in a few months time. On the plus side, those with offset mortgages do tend to pay off their borrowings in a much shorter time than those on any other type of repayment plan, but this only really works if you have a significant amount in savings, and the capacity to put a lot more into your savings during the repayment term.
For those will only a small amount in their savings and who make deposits irregularly, you will find that this type of repayment has very few benefits for you, and you would be best to look into other options.
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