Research by First Direct has revealed that switching to an offset mortgage could see borrowers reduce the time it takes to reach their 'Mortgage Mercy Day' by more than two years.
The bank found that it takes the average mortgage borrower almost 12 years to reach this point - the theoretical moment at which borrowers would start to pay off the loan if all interest payments on a repayment mortgage were accumulated and paid off first.
However, if borrowers were to switch to an offset mortgage, they could see their Mortgage Mercy Day brought forward by two years and four months - and by five years and two months if they moved to a First Direct offset deal.
"Mortgage Mercy Day helps to illustrate just how much interest borrowers pay their lenders and how an offset mortgage can go a long way towards reducing monthly payments or helping to pay the mortgage off years earlier," said Richard Kimber, chief executive of First Direct.
"The arrival of your Mortgage Mercy Day - when you begin to pay for your home, not your loan - is a good psychological boost."
Offset mortgages work by linking the loan to savings and current accounts in order to offset the loan against the value of credit balances. Borrowers can thus pay less interest - a mortgage of £100,000 offset against savings worth £20,000 would mean that interest is payable on only £80,000 of borrowing.Click here to compare the best mortgage deals.
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