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Mortgage holders giving needlessly to the taxman

Date: Tue, 26 Apr 2005

Many UK mortgage holders are giving money to the taxman when they could be earning interest on their savings.

Online and telephone bank First Direct estimates that many borrowers could benefit from an offset mortgage.

The offset loan could allow mortgage holders to earn the equivalent of up to 10.02 per cent on their savings and stop around £546 million going to the taxman.

Offset products allow homeowners to earn a tax-free interest rate on their savings and current account balances equivalent to their mortgage rate, thus removing the lower tax threshold.

"We all know that paying off debt makes more economical sense than earning interest on savings, yet we also need the financial security of a savings account, " said Richard Kimber, First Direct's chief executive.

"With an offset - what we call a 'savings mortgage' - customers get the best of both worlds."

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Endsleigh Insurance Services Limited is authorised and regulated by the Financial Services Authority. This can be checked on the FSA Register by visiting its web site at www.fsa.gov.uk/register.
Endsleigh Insurance Services Limited. Company No: 856706 registered in England at Shurdington Road, Cheltenham Spa, Gloucestershire GL51 4UE.