Make your mortgage £11,000 cheaper

Four million British mortgage holders can save £11,000 each in mortgage repayments by moving to an offset mortgage.

That is according to new figures from Yorkshire Bank, showing more than one mortgage holder in four (29 per cent) would save money with an offset deal.

Offset mortgages take any money in a customer's current and savings accounts away from the value of the home loan.

This means people effectively pay interest on a smaller loan, saving on repayments.

"The average homeowner who has their savings, current account and mortgage with the same bank but has not yet considered an offset mortgage could be missing out on a great opportunity," said Gary Lumby, Yorkshire Bank’s head of retail.

"With the recent rises in the Bank of England’s Base, many offset mortgage homeowners can see the positive balances in their savings and current accounts working even harder to offset the mortgage interest.

"With built-in payment flexibility there is also an option to overpay or underpay."

Council of Mortgage Lenders (CML) figures show 170,000 offset mortgages were taken out in 2006 - making up seven per cent of all new lending.

However, the growth in offset mortgages was considerably higher than the overall growth in mortgage lending.

"Mortgage lenders are constantly developing new products to meet the needs of borrowers and the fact there are now 250 offset products available in the market illustrates this," said CML statistician Phoebe Zhang

"Going forward, continued innovation by lenders will help to increase consumer awareness of offset products and expand the market potential for offsets in the future."