Offset mortgages could be 'best option'

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Offset mortgages could be 'best option'

Homeowners taking advantage of an offset mortgage could save themselves thousands in the long run according to new research.

An offset mortgage essentially links mortgage repayments to the balance in current and savings accounts and interest accrued is paid on the difference between them.

Intelligent Finance, an offset lender, found that if an individual has eight per cent savings compared to their loan, for instance £8,000 in savings and a mortgage of £100,000, then they will be better off using an offset mortgage.

Offset mortgages feature in the portfolio of 36 banks and building societies in the UK, including first direct, Woolwich and Yorkshire Building Society.

Deals can vary and suit the specific needs of the customer. For example, Abbey offers a rate of 5.04 per cent until March next year when it rises to 0.75 per cent above base rate.

And first direct offers a rate of 5.39 per cent for three years on its three-year fixed-rate offset mortgage which then reverts to the standard variable for the remaining term.

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