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To offset or not to offset?

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    The popularity of offset mortgages is on the rise, making up ten per cent of the total UK secured lending market in 2004, a figure which is expected to increase to 30 per cent by 2009.
    With this in mind, financial information provider Moneyfacts has urged consumers to consider their options when choosing a mortgage vehicle, and not to rule out an offset mortgage in the future, even if current financial circumstances might prevent it.
    Offset mortgages let customers manage their own payment structure and customers may quickly see their mortgage term decrease, according to the company. However, rates offered tend to be more expensive than those on traditional mortgages and are best used as part of a long-term finance plan.
    "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." advised Moneyfacts mortgage analyst Rachel Mckay.
    Offset mortgages set money in a customer's savings or current accounts against the mortgage balance and means that interest is only charged on the outstanding amount, reducing interest payments Although the customer doesn't receive interest on their savings, it will also mean that they will not pay tax on it. Offset mortgages can suit a wide range of people and encourage greater customer loyalty, according to Natwest.
    "Offsetting tends to reward loyalty, with customers who have maximised the savings/current account options benefiting the most," said a spokesman.




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