Two-fifths don't understand offset mortgages

Research by First Direct has revealed that 40% of homeowners don't understand the basic idea of an offset mortgage and a further 35% only roughly know how they work.

This trend highlights how consumers may be missing out on saving money and reducing the term of their mortgage with just two in 10 seeing offsets as a way they can save money on their mortgage.

Findings from First Direct show that swapping to an offset mortgage could cut down the length of a £100,000, 25-year mortgage by four years and save £24,232 in interest payments over the lifetime of the mortgage.

First Direct’s head of mortgages Jimmy Kelly said: “It’s a real worry that consumers are not aware of the benefits of an offset mortgage.”