Offset mortgage explained: What is it and how can it save me money? | Personal Finance | Finance

However, she noted: “The higher savings balance, the more benefit you will experience by being on an offset deal. That’s why making a regular savings deposit can make a big difference if you decide to go down this route.”

Offset mortgages can also provide people with more flexibility in this economic climate.

Ms Cassidy said: “They allow you to dip into your savings at any time, in case of emergencies.”

Money Expert added: “Some lenders allow you to link more than one savings account too, meaning your friends and family can lend a hand by linking their savings to your Offset Savings Account – ideal for birthday or Christmas gifts.”

There are also some risks to be aware of before looking to offset a mortgage.

Money Expert said: “An offset mortgage may not always work out cheaper overall if you have lots of money saved up as it depends on your individual situation. For example, if you have a lot of savings, you won’t earn any interest on these if they are used to offset your mortgage, however, you will pay a lot less interest on your mortgage.”

Interest rates can also be higher with offset mortgages due to a limited market, which may result in the borrower paying more overall.

Money Expert continued: “A limited number of lenders means that finding a provider may be a challenge as well.”