Consumers Confused Over Offset Mortgage Benefits

Dec. 2, 2009 - PRLog -- A new survey has shown that Brits do not understand how an offset mortgage works or the positive effect it can have on repayments .


Conducted by First Direct, the poll revealed that 40 per cent of consumers in the UK do not understand the mortgages, which are linked to current accounts, while a further 35 per cent only have a rough idea of what they entail.


The lender explained that repayments for a 25-year mortgage on a £100,000 property could be cut by £24,232 and the time spent paying back interest reduced by four years.


Jimmy Kelly, head of mortgages for First Direct, said: "It's a real worry that consumers are not aware of the benefits of an offset mortgage ."


First Direct currently has the market-leading offset tracker mortgage, which would have an equivalent savings rate of 5.10 per cent for higher earners, he added.


An offset mortgage at 3.25 per cent with a loan-to-value of 75 per cent was recently launched by Abbey, available to customers who have already been with the lender for more than six months.


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