UK property owners could save £850 million every year by switching to offset homeowner loan mortgages, claims Intelligent Finance.
To compare mortgage rates between offset and the regular best mortgage rate, homeowners could save an average £370 in the first year alone, Intelligent Finance says.
Offset mortgages compare mortgage rates against cash held elsewhere by the borrower.
Someone with a £100,000 mortgage would effectively have their borrowing reduced to £90,000 if they had £9,000 in savings and an average £1,000 in their current account.
To compare mortgage rates over the course of a lifetime, offsetting £10,000 in savings against a £100,000 loan could lead to overall savings of £20,177.74.
“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.”
© Adfero Ltd