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Offset mortgages could save Brits millions

02 December 2005
British households could knock £850 million off their mortgage payments by switching to offset mortgages.

Research by Intelligent Finance revealed that a quarter of UK householders could save £370 in payments in the first year of their mortgage by switching.

Offset mortgages work by taking any money in a customer's savings and current account from the value of the amount they are borrowing.

Intelligent Finance says people are reluctant to take out offset mortgages because they are not sure how they work and do not fully realise the benefits they could gain.

"While offset mortgages are growing in popularity, many people find it hard to quantify the potential benefits they can offer - yearly savings, flexibility, and tax benefits, to name but a few," said Nick Robinson, Intelligent Finance managing director.

"This research puts to rest the myths surrounding offset, while revealing that millions of people in the market for a mortgage could be better off offsetting," he added.

For example, a homebuyer taking out a £100,000 mortgage with £9,000 in their savings account and an average balance of £1,000 in their current account, could have their total mortgage reduced to £90,000 and only pay interest on that amount.

Around a quarter of mainstream mortgage providers offer offset deals while some also have current account mortgages.

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