One type of remortgage that many people are opting for today is an offset remortgage which works by putting all of your money in one place, this includes your current account, savings, mortgage, credit card and loans. This then gives you the freedom to use your money as you like and have a greater degree of flexibility over your finances.
By taking out an offset remortgage you get to see all of your money in one place which means one statement and lower interest rates for all of your loans and credit cards, saving you money and allowing your money to work better for you. Many offset mortgage lenders now offer these types of mortgage with separate accounts that are connected as appose to the classic "one account" style. The one account style offset mortgages work on the principle of you having on account that until the debt is repaid you will show as overdrawn. This can be difficult to manage compared to the new style separate pots as in principle you will keep your separate bank account, savings account, credit card, loan and mortgage as separate accounts which the lenders system will average out each day when calculating how much interest you are charged.
As with all remortgages there are advantages and disadvantages to taking out an offset remortgage and here they are
Advantages-
You benefit from a good return on your savings which is tax free, this can be benefical to high rate tax pays. You have the choice of how much to pay for your remortgage each month and total access to all your finances. You only have one low interest rate on anything you have borrowed which can add up to a large saving.
Disadvantages-
You might pay a higher interest rate when compared to a discounted/tracker rate remortgage. When compared to a fixed rate remortgage there is little stability if interest rates go up. You receive no direct interest on your savings or bank account as this money is offset against you debts.
If after looking at the advantages and disadvantages of an offset remortgage you would like to know more you can visit one of the many online mortgage comparison websites. Or for a more personal approach why not contact an independent financial advisor who can help you with any questions you might have about an offset remortgage. Many professional mortgage advisors offer fees free mortgage advice and will be able to see if an offset mortgage is the right remortgage for you.
Author Resource:-
Jason Haines is a protection and mortgage advisor at godirect.co.uk, one of the UK's most trusted information site about personal finance. They have details of the latest online mortgage deals and some of the best life insurance buys on the web.
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