The mortgage enables up to two family members or friends to link their savings account to the borrower's offset mortgage. No interest is paid to the saver but with the average instant access savings account paying less than 1% and with average mortgage rates on a five-year fixed rate loan being 4.89%, any savings put towards an offset mortgage will be helping the borrower to pay less every month or to reduce the term of their mortgage considerably, for very little sacrifice of savings interest.
Chris Edwards, head of mortgages and savings at Yorkshire Building Society said: "With interest rates at an all time low it's great news that customers are realising the benefits of offsetting savings to their mortgage. The success we are seeing with our Offset Plus account doesn't surprise me as it's a really good way to help a family member or friend with their mortgage without having to hand over large sums of money.
"With Offset Plus the money is not actually given to the borrower, instead it is deposited into the saver's separate savings account, which is linked to the offset mortgage. The saver retains full control of their money and is able to make withdrawals and deposits at anytime in the usual way.
"Offsetting is also very tax-efficient, especially for higher-rate taxpayers as savers don't earn any interest on their savings so they do not pay any tax on their offset plus savings either."
Yorkshire Building Society has a range of offset mortgages and is one of only a handful of companies who offer this type of product with a fixed rate option. Rates start from just 3.79% fixed for two years.
