Offset mortgage

Offset mortgage,

Definition of Offset mortgage:

  1. The financial institution establishes an initial loan or credit limit, along with an interest rate, for any borrowed funds. The savings account is typically a non-interest bearing account, which allows the bank to earn a positive return on any balances held in the account. .

  2. An offset mortgage is a type of mortgage that involves blending a traditional mortgage with one or more deposit accounts held by the same financial institution. The savings balance maintained in an account may offset the mortgage balance.

  3. A type of flexible mortgage which calculates the mortgage holders net balance by subtracting the credit balance from the mortgage balance. By linking a homeowners credit and debit accounts, such as a personal savings account or even a credit card, to the mortgage the homeowner could see a reduction in interest. For example, a homeowner with a mortgage balance of $400,000 and a credit balance of $50,000 in a savings account would have a net balance of $350,000 ($400,000 - $50,000). The interest would be calculated on the $350,000. An offset mortgage is most likely to be used in the United Kingdom. Also called current account mortgage (CAM).

How to use Offset mortgage in a sentence?

  1. Offset mortgages are standard in many nations but U.S. tax laws do not currently allow them.
  2. An offset mortgage involves blending a traditional mortgage with one or more deposit accounts at the same financial institution. .
  3. An offset mortgage is an attractive option for paying back a mortgage loan primarily because the borrower can make small payments to pay down the principal instead of the interest.
  4. The savings balance maintained in the deposit accounts may offset the mortgage balance.

Meaning of Offset mortgage & Offset mortgage Definition