Offsets gathering steam

Borrowers’ awareness of offset mortgages has grown exponentially and today nearly half (45%) would consider switching to an offset product.

Earning around 500 per cent more on their savings, over the last five years a higher-rate tax-payer with £1,000 would have made an additional £334.73 compared to the average saving rate offered by the big four banks.

Research conducted by the Council of Mortgage Lenders (CML) shows that in the last 12 months alone the UK offset market has grown by half (49%), versus only 15% for the non-offset market.

Mark Parker, managing director of Intelligent Finance, said: “Homeowners who don’t consider offset could wake up to find a gaping hole in their pockets by the time they’ve paid their mortgage off. In the meantime offsetters could have paid off their debt years before and saved themselves thousands of pounds.”

Given the choice, seven in ten people would either reduce their mortgage term or increase their mortgage repayments to reduce their balance over time. One in five would welcome the ability to lower the amount on their regular mortgage payments.

The average mortgage customer with a 25 year offset tracker mortgage, borrowing £150,832 on a repayment basis against a property worth £214,222 with £17,278 in savings, could knock 68 months off their mortgage term and save £79,891 in interest with an offset product.