Offset Mortgage Vs. Savings Calculator – MoneysavvyUK
Got it! Here’s a step-by-step guide for users to help them understand and use the Offset Mortgage vs. Savings Calculator from MoneySavvyUK.
Offset Mortgage vs Savings Calculator
How to Use the Offset Mortgage vs. Savings Calculator
This calculator helps you compare the potential savings you can make by offsetting your mortgage with your savings versus keeping your savings in a regular savings account. Follow these simple steps to get the most accurate comparison:
Step 1: Enter the Mortgage Amount (£)
In the first field, input the total amount of your mortgage. This is the loan amount you borrowed for your property.
- Example: If you borrowed £200,000, enter “200000.”
Step 2: Input the Mortgage Term (Years)
Next, enter the number of years over which you plan to pay off the mortgage. This is the term of your loan.
- Example: For a 25-year mortgage term, enter “25.”
Step 3: Enter Your Savings Amount (£)
In this field, input the total amount of savings you currently have, which could be used to offset your mortgage.
- Example: If you have £30,000 in savings, enter “30000.”
Step 4: Enter the Mortgage Interest Rate (%)
Input your current mortgage interest rate as a percentage. You can usually find this in your mortgage agreement or by asking your lender.
- Example: If your mortgage rate is 3.5%, enter “3.5.”
Step 5: Input the Savings Interest Rate (%)
In this field, enter the interest rate you’re currently earning on your savings. This is the percentage return you get from keeping your money in a regular savings account.
- Example: If your savings account offers an interest rate of 1.2%, enter “1.2.”
Step 6: Click on “Calculate Savings Comparison.”
Once all the fields are filled out, click the Calculate Savings Comparison button. The calculator will compute the difference between the interest saved by offsetting your savings against the mortgage compared to the interest you’d earn by keeping your money in a savings account.
Step 7: Review Your Results
After hitting the calculate button, the result will be displayed below the input fields in the Results section.
- The calculator will show two outcomes:
- Interest Saved by Offsetting: This shows how much money you’d save by using your savings to reduce the mortgage balance.
- Interest Earned in Savings: This indicates how much interest your savings would earn if kept in a regular savings account.
You can now compare both results and make an informed decision about whether it’s more beneficial to offset your mortgage with your savings or leave the savings in a bank.
Example:
Let’s say you input the following values:
- Mortgage Amount: £200,000
- Mortgage Term: 25 years
- Savings Amount: £30,000
- Mortgage Interest Rate: 3.5%
- Savings Interest Rate: 1.2%
By offsetting the £30,000 savings against your mortgage, you might save a significant amount in mortgage interest over the loan term. The calculator will show you how much interest you’d save versus how much you’d earn if the money stayed in a savings account.
Benefits of Using the Offset Mortgage vs Savings Calculator:
- Simplicity: It allows you to quickly compare two different financial strategies: offsetting your mortgage with savings or earning interest from a savings account.
- Informed Decision: You can better understand which option could save you more money over time, helping you optimize your financial planning.
Use this calculator regularly to compare as your savings and mortgage details change!
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