Findings from first direct show swapping to an offset mortgage could cut down the length of a £100,000 25 year mortgage by almost three years (33 months), and save £18,322 in interest payments over the lifetime of the mortgage.
Many homeowners do not understand the benefits of offsetting - just two in 10 (21%) see offsets as a way they can save money on their mortgage. And close to half (48%) admit they don't understand the basic principle.
first direct spokesman, Jimmy Kelly, said: "Our research shows offset mortgage lending now accounts for £1 in every £10 being lent to UK mortgage holders, and is on course to reach a record share of new mortgage lending in 2009.
"More and more savvy savers are starting to see their potential, helping them make the most of their savings pot, and forcing their money to work much harder."
In the past three years 400,000 new offset mortgages have been issued, taking the amount of UK home-owners with an offset mortgage to 1.1 million.
