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But very, very difficult to compare to normal accounts!
Like Sean says, you have a linked savings account (or accounts). Any money in there is taken into consideration when calculating the interest owed on your remaining loan. So if you still owe £150000 but you have £10000 in your offset account, they'll only calculate interest on £140000. But you have access to that £10000 should something arise which needs it. (For example, we plan to keep at least one year's salary in order to supplement maternity leave should the situation arise.)
We got ours through the Yorkshire Building Society and the rate was pretty favourable even without the offset, though it wasn't the best out there (we were offered a better rate from TSB on a conventional mortgage but we have enough savings that offset made more sense).
Basically, as long as your savings accounts are earning a lower rate of interest than you're paying on your mortgage, you're as well to keep the money in the offset. Especially if you're paying tax on the savings. But if you don't have much by way of savings, you're probably better getting a lower interest conventional mortgage.
Of course in theory, should you ever manage to get a better savings rate, you can take the money out and invest it - our neighbours back home did that once.
One cool thing with Yorkshire Building Society's offset is that we don't have to be the ones putting money in the savings accounts. Our parents (or even friends) can link an account to ours to save us some money (sacrificing their own interest, of course).
We found that most out there aren't open to first time buyers, I don't know about transferring mortgages - but I'd have thought that would be ok. They tend to want better loan-to-values too - ours is 75% and we saw some really nice ones if you can manage 60% ltv.
Any more questions, just ask. Are you coming to mortgage renewal time? Get in before the interest rates go up in a few months!
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(VISITOR) AUTHOR'S NAME
EofW
MESSAGE TIMESTAMP
26 june 2014, 03:07:11
AUTHOR'S IP LOGGED
83.100.130.80
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