An Offset Mortgage Can Help With Savings

According to Defaqto, just 33% of Cash ISAs are offering a rate above 3% and many also require consumers to fix savings for at least 3 years otherwise a penalty is charged to make withdrawals.

An offset mortgage may help you make better use of your savings and reduce the interest charged on your mortgage.

Kevin Bray, Insight Analyst at Defaqto said; “Customers taking out a £100,000 offset mortgage at rate of 2.74% and holding £20,000 in a linked savings account would only pay interest on the remaining £80,000 which could save more than £14,000 in interest and shave 5 years off your mortgage term.

Compare this to £20,000 in a Cash ISA with an average rate of 2.40% where the return would only be less than £12,000?.

When considering an offset mortgage you need to look beyond the cheapest rate. As Mr Bray comments “Look for specific product features that suit your financial needs as these vary enormously.

We analysed 157 offset mortgages for our Star Ratings and found the most common features to be linking multiple accounts to the mortgage, flexible payment options and access to savings at any time. These might not suit everyone so it’s important to check what you are getting before you commit”.

Defaqto is an independent financial research company specialising in rating, comparing and analysing financial products and they currently determine that the best offset mortgage rates for re-mortgages are available from First Direct, Yorkshire Building Society and Melton Mowbray.

For more information please call Peter or Bob on 01305 776311