Case study: Offset
They took out an offset mortgage with First Direct when they moved house in 2011.
“We have banked with First Direct for years and had savings accounts and ISAs with them,” explains John.
“But we calculated that it made much more sense to cash in our ISAs and offset the whole lot against our mortgage debt. Obviously ISAs are appealing as they are tax-free – but then, as all of our savings are now tied up in our mortgage, the whole lot is tax-free. And we can access what were our savings whenever we want if necessary.”
Elizabeth adds: “The interest rate charged on the offset mortgage is a fair bit lower than we were previously paying on a fixed rate, but we decided to maintain our monthly repayments at the same level, so we are overpaying a fair amount. If we can keep it up then we should pay off our mortgage years early, and save many thousands of pounds, which is fantastic.”