offset mortgage

P

pad1010

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how does the offset mortgage work exactly.
eg. If i have 100K borrowed and 100K sitting in a bank account for the month, does this mean that no interest will be chargeable for this month?
 
In theory yes - the balance on deposit it offset against the capital owed.

In this case I guess that no interest would accrue and you would just pay the capital repayment amount. Then you would have €100K on deposit and some amount less than €100K outstanding. You would also be paying the normal mortgage protection life assurance premium separately or combined with the mortgage repayment.
 
..and isn't it true to say that there are no DIRT issues like you'd have if you had the €100k in a deposit account. In other words, you don't lose 20% of your savings interest, instead this is offset against the mortgage.
 
You mean on the "return" attributable to savings in mortgage interest costs? Yes - no DIRT. But DIRT would be deducted on any interest that the balance earned separately (if such accounts ever pay interest)?
 
For a reason I can't remember now you can't have the same (or more) on deposit than you owe on the mortgage. I think the account goes pooooof and disappears in a haze of pink dust if you do. Or something.

Sarah W.
 
First Active have an Offset Flexible Mortgage choice. Follow the below link to see how it works:

[broken link removed]
 
The problem that I found, comparing to other mortgages is that the interest rate is higher. I worked out I needed €25k on deposit for the incremental interest saving (versus Rabo/NRock) to equal the additional interest cost (v NIB LTV), allowing for DIRT. For me, holding cash of €25k when I could be investing elsewhere at higher return (and risk) (even in light of recent volatility) did not make sense. If you have 100k, better to put it into range of growth options, not just interest avoidance.
 
I have one of these offset mortgages and my monthly repayments are €750 however I pay €1000 into my facility account with €750 being paid into my mortgage account and the remaining €250 going into my facility account, Would I be better off getting the full €1000 paid off my mortgage or am I better off with the €250 going into my facility account

Many thanks
 
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