One of the most satisfying aspects of offset mortgages is not just the great savings you can make, but also the fact that all those savings are out of the reach of the taxman.

No one likes paying taxes, especially at a time when there is so much sleaze and corruption within the halls of Westminster. So opt for a mortgage that keeps your money where it should be – in your pocket. Because with an offset, you do not accrue interest on any money offset against your home loan, you merely reap the rewards through a cheaper repayment rate. So no interest means no tax, which means more savings for you, especially if you are a high earner on a greater tax bracket.

This means that if an offset mortgage had an interest rate of 4.5% for example, the equivalent savings rate in a standard account would have to be 5.6% gross for a basic-rate taxpayer, or 7.5% for a higher bracket taxpayer. In the past these figures could have been compared to some of the top savings rates, and there would have been an argument against offset – but not anymore.

Compare those returns with the best instant-access account around right now, in this low rate environment. Stroud & Swindon, for example, is paying just 2.25%. After tax, that’s no saving at all.

Offset, with it’s great rates and tax-free incentives, has to be the obvious choice. Right now there is nothing out there that can compare to offset, simply. If you want to get on board and make the most out of your money talk to your mortgage adviser right away about a mortgage that beats the savings rates and makes you real money, every month. Money that will not find it’s way into the taxman’s pocket.

SOURCE: Calculations from The Times, 16/05/09

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