Definition of Offset mortgage:
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. .
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.
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?
- Offset mortgages are standard in many nations but U.S. tax laws do not currently allow them.
- An offset mortgage involves blending a traditional mortgage with one or more deposit accounts at the same financial institution. .
- 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.
- The savings balance maintained in the deposit accounts may offset the mortgage balance.
Meaning of Offset mortgage & Offset mortgage Definition