As yet no British bank offers the facility for families to link savings accounts together to gain the superior interest rates paid on larger balances. But individuals can pool their own finances via an offset mortgage. Here, savings are offset against your mortgage and individuals only pay interest on the difference.
Given that interest charged on debts is far higher than the rate paid on deposits, this can add up to substantial savings – particularly in the current climate where savings rates are so low. Almost half a million people now have these mortgages.
According to First Direct, a higher-rate taxpayer with an average savings balance would have been almost £3,000 better off with an offset mortgage over the past two years when compared with returns from a best-buy savings account.
As offset mortgages tend to have slightly higher interest rates than conventional home loans, they are more suited to those who already have some savings.
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