The reality of the current UK housing market is sobering.  Lending criteria is tight.  Mortgage and remortgage applications are still considerably off the pace of the pre-crisis days from a few years ago. And, consumer confidence is still hanging by a thread.  Overall, uncertainty in the market reigns.  There is one tool to assist the everyday homeowner, which involves the current low interest rate on savings accounts, that could make a positive impact on many savers within the UK.

The tool is called an offset mortgage.  Homeowners who have something in the savings account can link the account to their mortgage loan.  Instead of the savings account earning interest it is set against the mortgage, in effect providing a return, so to speak, which is equal to the mortgage rate.

For example, if a mortgage holder has 5,000 pounds in savings, and a 125,000 pound mortgage, interest on the mortgage payment would only be calculated on 120,000 pounds of debt.  Ultimately, this lowers the remaining balance to be paid plus the interest.

London & Country’s David Hollingsworth commented on the savings and mortgage tool, saying: “The timing for taking an offset loan is as good as it has ever been. There is a wide range of products and returns that beat the rates on most savings accounts.”

Chris White, Hinckley & Rugby Building Society chief, believes in the tool and the options it gives homeowners who are also savers, saying: “Offsetting gives customers real flexibility.  They can use savings to reduce a loan but still have access to the money if they need it.”