Poll reveals confusion over offset mortgages

Wednesday, November 25th 2009

Four in ten homeowners do not fully understand the workings of an offset mortgage, according to a new poll.

The survey by first direct also found that just over one-third of these Britons only roughly know how these products operate.

According to the bank, this indicates that some consumers may be missing out on potential savings on the cost of their home loan, as less than one-quarter of respondents said they thought offset mortgages could save them money.

Offset mortgages enable homebuyers to link their current and savings account balances to their home loan, so they only pay interest on the difference.

"It's a real worry that consumers are not aware of the benefits of an offset mortgage," commented Jimmy Kelly, head of mortgages for first direct.

According to This Is Money, taking out an offset mortgage could help homeowners to save thousands of pounds over a loan term of 25 years and increase tax efficiency.