| A mortgage is method to secure or obtain a loan | | | | 2. Mortgage account |
| against any property, which an individual possesses. | | | | 3. Savings account. |
| The lenders usually set the credit limit at the beginning | | | | These three accounts are charged at a different rate |
| of the process and the mortgagor may redraw unto | | | | or there is a possibility that the lender would charge |
| this limit set by the lender. | | | | the interests at a fixed rate or there also is a possibility |
| Any property can be mortgaged to obtain a loan land | | | | that the interest would be charged in accordance to |
| happens to be the most common. A mortgage could | | | | the latest market rates. |
| be looked upon as a security for the loan being taken. | | | | The various advantages other than those listed above |
| The mortgage is terminated when the complete | | | | are |
| repayment of the loan has been done. | | | | 1. It offers a very flexible method of mortgage |
| Mortgage laws are different for different countries and | | | | 2. The more money one has in his current account |
| the method including various rules depend on the | | | | above the monthly payment the lesser would be the |
| particular country. The borrower or the person who | | | | interest paid on the original amount of the capital loan |
| requires a loan and who mortgages his /her property | | | | 3. It is a lot cheaper to get a loan from this account in |
| is known as a mortgagor. The party, which lends loan | | | | comparison to interest rates that would be offered on |
| against the mortgaged property, is known as the | | | | credit and store cards. |
| mortgager. | | | | 4. This proves to benefit a lot in terms of the amount |
| An offset mortgage is a type of mortgage used in the | | | | of tax savings it offers as it groups or classes the |
| case of a purchase of domestic property. | | | | mortgage to the savings account and thus reducing |
| The offset mortgage works in a similar fashion to the | | | | the mortgage debt. |
| current account mortgage except for the customer, | | | | As all good things come with a condition the offset |
| different balances are completely kept separate. This | | | | mortgage also has some disadvantage |
| type of a mortgage is useful to those people who pay | | | | Disadvantages of the offset mortgage are |
| huge sums of interest, as this method is very tax | | | | 1. To make the current account mortgage work |
| efficient. | | | | properly and efficiently requires a lot of planning, |
| This type of a mortgage also helps in using both the | | | | budgeting and discipline |
| current and the savings to have a higher equity in their | | | | 2. Offset mortgaging is a new field as compared to |
| homes. Let us now see how exactly the offset | | | | other mortgaging options and thus this so called newer |
| mortgage is different from the current account | | | | version of the mortgage is limited in offer by only a |
| mortgage. | | | | few lenders. |
| In the offset mortgage three separate accounts are | | | | 3. The interest rate is different for the current and |
| maintained. | | | | mortgage account hence one does not have the |
| 1. Current account | | | | option to save at the standard viable rate. |