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First Direct finds offset mortgages could save you more

26 April 2005
First Direct is alerting mortgage-holders to the fact that they could get earning up to 10.02 per cent on their savings and keep the more than £546 million they're paying to the taxman by swapping to an offset deal.

With an offset mortgage, homeowners set their savings and current account assets against their total mortgage and pay interest only on the difference between the two, thus reducing the interest payable, First Direct states.

The bank estimates that the roughly 14 million non-offset mortgage holders in the UK with an average of £5,000 each in savings and £1,000 each in their current account are paying about £546 million straight to the taxman.

"We all know that paying off debt makes more economical sense than earning interest on savings, yet we also need the financial security of a savings account," explains Richard Kimber, First Direct's chief executive.

"With an offset - what we call a 'savings mortgage' - customers get the best of both worlds and it'll even work towards defeating the spectre of Hector by lowering tax liability."

First Direct has two offset mortgage offers, the popular three-year fixed-rate offset at 5.49 per cent (5.9 per cent APR), and the variable offer combining a rate of 4.99 per cent for three months with a standard variable rate currently at 5.75 per cent.

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