When to Take Out an Offset Mortgage

An offset mortgage is a type of mortgage that allows you to reduce the amount of interest that you pay, based on how much money you have in savings. The amount of interest on your loan is calculated by taking the principal balance, and subtracting the amount of money that you have in your savings account. 

Tax Benefits

One of the biggest reasons to consider getting an offset mortgage are for the tax benefits. When you can use your savings to lower the amount of interest that you pay, you do not have to pay taxes on the amount of money that you save. However, if you were to use that same money to invest in something, you would have to pay taxes on the interest that was earned on your investment. This allows you to save money on taxes and benefit by the lower interest. 

Typical Borrowers

Self-employed individuals commonly use an offset mortgage. This provides them with a way to have access to their savings in case they need it, but at the same time, their savings is accomplishing something for them. Anyone else that typically keeps a large savings account could also benefit from this type of mortgage.

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