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Offset Mortgage

This is a fully Flexible Mortgage which allows a borrower to keep balances (such as mortgage debt, savings account and current account) in separate accounts, but, for the purposes of interest calculation, all balances are aggregated. Money in savings or current accounts is set against the mortgage balance and interest is only charged on the outstanding amount, meaning interest payments are reduced.

Overpayment

This is when an unscheduled capital repayment is made or when monthly repayments are increased, in order that the mortgage is repaid before the end of the mortgage term, saving considerable sums of interest. Many traditional (i.e. Non-Flexible) mortgages include Early Repayment Charges if over-payments are made within a set period. In contrast, Flexible Mortgages allow unlimited over-payments without penalty and, increasingly, mortgages are semi-Flexible; allowing borrowers to overpay a certain percentage of their loan each year without incurring Early Repayment Charges.