Offsets are no panacea They pay off the mortgage early and stop you paying tax on your savings - so should we all get one? Beware, says Richard Evans, offset loans have their drawbacks too

From: The Sunday Telegraph London | Date: August 14, 2005| Author: | Copyright information

"SWITCH to an offset mortgage and pay off your home loan early'' - this is the marketing spiel used to promote these relatively new home loans.

But while the promise is certainly appealing - after all, who doesn't want to pay off their mortgage early - are these deals likely to benefit the majority of homeowners?

Offset mortgages are ideally suited to homeowners with significant cash savings. This is because they work by "offsetting'' the cash you hold on deposit against the money you have borrowed, so you only pay interest on the outstanding balance, in theory reducing interest payments. So ...

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