Homeowners could save more than £22,000 on the costs of their mortgage or pay it off five years earlier with an offset mortgage, new figures have shown.
Offset mortgages allow homeowners to count money held in their savings and current accounts against the cost of their home loans, slashing interest payments.
The accounts have in the past been mostly used by people with above average savings but have grown increasingly popular in recent years as people have begun to compare mortgage rates against the advantage of offsetting.
Offset mortgages made up just ten per cent of the total mortgage market but that is predicted to grow to 30 per cent within the next three years.
A homeowner with £5,000 in savings who added £50 every month could cut £22,688.81 from the cost of a £100,000 mortgage, and pay it off three months earlier.
Someone who overpaid their mortgage by £50 a month rather than putting it in a savings account could save £17,052.71 and clear their debt five years and nine months sooner.
“Although your current financial circumstances may prevent you from taking advantage of offset or current account mortgages, don’t dismiss them completely, said Moneyfacts mortgage analyst Rachel Mckay.
“With professional financial planning they may still prove to be a beneficial option to consider in the future.
“Offset mortgages provide consumers with the ability to manage their own repayment structure, permitting overpayments, underpayments and payment holidays, and with the possibility of a hassle free additional drawdown facility,” she added.
© Adfero Ltd