Statistics from moneysupermarket.com revealed that for savers with £14,000 put away, an offset mortgage could allow them to negate the effects of, at least, the next two base rate rises.
The research dispels the view that the savings needed to make an offset product applicable were prohibitively high. Moneysupermarket.com claimed that contrary to popular belief, offset mortgages can be fairly straightforward.
Louise Cuming, head of mortgages at moneysupermarket.com, said: “Taking a holistic view to mortgages and savings can be a much more effective way to manage borrowing. Though they may not realise it, many households looking for a new mortgage would be better off with an offset mortgage, and yet offset mortgages only account for a minority of the market. Unfortunately the majority of customers tend to go back to what they understand – cheap short term deals.”
Justin Wiggins, IFA at Helinton Financial Services agreed that offsets could offer great savings. However he warned they were not suitable for everyone.
He said: “If you are a person of cautious mind when it comes to investing and you have a reasonable amount of disposable income or have savings over £10,000, an offset mortgage can offer you a tax efficient vehicle for savings or an effective way of reducing your mortgage liability. The only disadvantage of an offset is that in the market of rising interest rates, you cannot fix your monthly payments.”
