Offset mortgages 'could work for higher rate taxpayers'

Date:Wednesday 19th May 2010
Author: Susanna Kavka

Higher rate taxpayers could find that an offset mortgage is a smart move, according to a representative from Defaqto, who has highlighted how different such products can be.

Banking specialist at the firm David Black recommended homeowners need to think carefully about which features are important to them before they begin their research.

He explained that offset mortgages can be a good idea for people who have a reasonable level of savings, pay a higher rate of tax and have a mortgage, since the savings interest is offset against the mortgage charge, rather than being deposited into a savings account.

Mr Black remarked: "Offset mortgages effectively offer tax free interest on savings at the same rate as the mortgage."

Defaqto suggested that landlords and the self-employed could also benefit from such an arrangement.

The firm recently highlighted how many mortgage deals are currently being offered to existing customers by lenders, with over one-quarter falling into this category.