Three ways to save money on your mortgage

People can save money on their mortgage whatever their circumstances, a new report indicates, by moving to a flexible, offset, or fixed-rate deal.

New research from financial comparison service moneyfacts.co.uk shows that a series of options is available to consumers - all offering borrowers a cheaper deal.

With an offset mortgage Britons can potentially take years from the amount of time it takes to pay off a mortgage and save money on interest-payments.

By moving to a flexible mortgage, and regularly overpaying, people can similarly save money on their mortgage payments and pay off their loan even sooner.

For people whose money is tight, moving to a deal with a cheap introductory rate can see borrowers save over £1,000 on payments in the first two years alone.

"Although your current financial circumstances may prevent you from taking advantage of offset or current account mortgages, don’t dismiss them completely, as with professional financial planning, they may still prove to be a beneficial option to consider in the future," said Rachel Mckay, mortgage analyst from moneyfacts.co.uk.

"Even if an offset mortgage or current account mortgage doesn’t work for you at the moment, you can still save yourself money by taking out a low rate fixed or discounted deal," she added.

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

This means that someone with a £100,000 mortgage, £9,000 in a savings account, and an average balance on their current account of £1,000, would effectively have their mortgage debt reduced to £90,000 - and only pay interest on this amount.

However, for those without significant savings, simply using a flexible mortgage - which allow borrowers to overpay and take payment holidays without incurring charges - and overpaying whenever possible can save thousands on interest payments and pay off their mortgage years early.

And for those unlikely to overpay in the near future, a deal with a cheap introductory rate can see people save money in the short term.

"By shopping around for a good deal for the first couple of years of your loan, you will be keeping your repayment costs to a minimum," said moneyfacts' Ms Mckay.

"At the end of your initial deal, your income may have increased and your financial situation improved, thus making it worth looking at the possibility of using savings or making overpayments to reduce your mortgage interest costs and/or mortgage term.

"Consumers should keep an eye on the best buy tables or mortgage comparison websites, and ensure they regularly seek independent financial advice to ensure the right mortgage vehicle is used to suit their individual circumstances."

To find a cheap UK mortgage, go to www.myfinances.co.uk/mortgages.htm