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Cheap mortgage hunters should be wary of offset mortgages

Date: Tue, 07 Mar 2006

Cheap mortgage hunters are being warned to double check that an offset mortgage will meet their borrowing requirements.

A new report from financial research company Defaqto has concluded that offset mortgages may only be beneficial to high-rate taxpayers who are looking for a long-term commitment and have substantial savings.

The market has seen a sharp increase in the number of offset mortgages available over recent years as lenders look at ways of attracting new customers. However, anyone looking for a cheap mortgage deal is being advised to consider other forms of borrowing before automatically committing to an offset mortgage.

David Black, head of banking at Defaqto said: "If offset mortgages are approached as a fundamental part of the borrower's financial planning process they can offer great benefits.

"However, they are definitely products for the long-haul and should not be contemplated unless borrowers are fairly certain that they will be able to leave what can be significant sums of money more or less untouched in savings accounts over the mortgage term."


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