LONDON: Offset mortgage schemes can help Britons save around 850 million pounds a year, according to a new study. Offset mortgage schemes are devised in such a way that a customer's holdings in his savings and his current accounts are taken into account while calculating the value of the mortgage.
According to the study by Intelligent Finance, offset mortgage can save on an average 370 pounds on repayments in the first year of the mortgage. Households with even minor savings can get their mortgage value reduced to a significant extent.
Intelligent Finance's managing director Nick Robinson said his company's research has put to rest the myths surrounding offset mortgage. It affords savings in the first instance, then there is flexibility and tax benefits among the several advantages, he added.
For example, if a person has opted for mortgage finance of 100,000 pounds and he has 9,000 pounds in saving and an average balance of 1,000 pounds in his current account, the mortgage debt is straightaway reduced to 90,000 pounds for purposes of calculating interest. Roughly, this can result in a savings of 20,177.74 pounds over the mortgage period.
Intelligent Finance said people have been reluctant to opt for this scheme because they are not sure how the whole scheme works and its exact benefits have not been filly understood.
Almost 25 per cent of all mortgage providers offer offset schemes.
Posted
on : Sun, 04 Dec 2005 10:25 GMT | Mortgages News
By : Paula Jenkins
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