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By Pete Mugleston | Mortgage Advisor

Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 16th November 2020*

Offset mortgages can be a viable option for anyone who has savings stashed away or can afford to put away a monthly saving, but is the tracker rate variation of this product right for you?

Fortunately, the advisors we work with are experts and can offer the right advice for your circumstances and help you find the best deal, even if you’ve been declined for a mortgage or you’re looking to apply for a mortgage with bad credit.

In this article, we’ll talk about offset tracker mortgages, including the pros and cons and cover a range of topics including:

If you prefer to skip the reading and do some talking instead, call 0808 189 2301 or make an enquiry and we’ll match you with one of the expert brokers we work with. They’ll be able to answer any questions you may have and help you find an offset tracker mortgage that’s right for you.

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What is an offset tracker mortgage?

Essentially, an offset mortgage allows you to use the money in your savings account to help reduce the amount of interest you pay on your mortgage.

Depending on how much money you have in a savings account, it could help you either reduce your monthly payments, pay off your mortgage faster, or both.

Because most mortgages come with higher interest rates than the average savings account, if you opt to offset your mortgage against your savings, you’ll end up paying less interest on your mortgage.

The ‘tracker’ element of these products refers to how the interest you will pay is worked out. Read on to find out more about this.

How does an offset tracker mortgage work?

It’s quite simple. Suppose you have a £100,000 mortgage and you have a savings account with your mortgage provider with a balance of £30,000, then you will only pay interest on a mortgage balance of £70,000.

But bear in mind that if you withdraw £10,000 from your savings account, then you will have to pay interest based on a mortgage balance of £80,000.

More often than not, interest is not payable on the savings but you’ll often end up saving a lot more in interest than you’d receive.

How does an offset tracker mortgage differ from a variable rate mortgage?

Put simply, a variable rate mortgage follows the Standard Variable Rate of the lender, and these can be very different depending on your circumstances and the lender in question.

The main difference is that a tracker mortgage follows a specific index such as the Bank of England base rate or the London Inter-Bank Offer Rate (LIBOR) , rather than the lender’s Standard Variable Rate (SVR).

You can find out more about tracker mortgages versus Standard Variable Rate mortgages in our article comparing the two types of mortgage.

Offset tracker mortgage rates

With an offset tracker mortgage, how much interest you pay is directly linked to the index it’s tied to, and how much money you have in your savings account.

For instance, if your savings are equal to your mortgage, then you’ll pay no interest at all.

There are only a couple of providers who offer them now, fortunately, the brokers we work with know who they are and can help you find the best deal.

There are quite a few different kinds of offset mortgages to choose from. Some may suit your circumstances better than a tracker offset mortgage, and you can find out more about offset mortgages if you talk to one of the expert advisors we work with.

How to find the best base rate tracker offset mortgage deals

Finding the best offset tracker mortgage deals can be time-consuming, and because everyone’s circumstances are different, rates tables can only give you a rough idea of kind of mortgages on offer.

Whilst there’s nothing wrong with going direct to a lender, you’ll have no idea if there’s a better deal for you elsewhere. You’ll have a very limited range of products to choose from, and their advisors work for the lender, not you.

They are also more likely to conduct a hard search and leave footprints on your credit rating. Which going through one of the expert brokers we work with won’t do.

This is where our expert brokers come in. They are whole-of-market and have professional relationships with lenders across the UK.

Which means they’re in the absolute best position to find the best deals and rates for your circumstances, even if you’ve been refused a mortgage or had bad credit.

Where to get the right advice on offset tracker mortgages.

We’ve helped over 120,000 people, just like you, get the right advice.

In fact, our customers consistently rate us 5 stars on Feefo, based on the level of service we provide…and of course, the positive outcomes.

Call us on 0808 189 2301 or arrange a chat with one of the expert advisors we work with. There’s no obligation and it won’t cost you a penny.

Updated: 16th November 2020
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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.