Goal

If your offsetting goal is to reduce the term of your mortgage then you continue to pay interest on your original £180,000 mortgage even though you are only required to pay it on £165,000. The difference is treated as an extra capital repayment, chipping away at the size of your mortgage. And while this may not seem as if this will make much difference, the effect of several years-worth of modest monthly overpayments soon ratchets up. It can help borrowers clear their loans several years ahead of a traditional 25 year term – knocking tens of thousands of pounds off their total repayments. In all cases, the more money you have in your savings account the bigger the potential benefits of offsetting will be.