Yorkshire building society has found that its offset products are very popular with parents wanting to help out their children with mortgage payments.

Some offset mortgages enable family members or friends to link their savings account to the borrower’s offset mortgage. No interest is paid to the saver but any savings put towards an offset mortgage will be helping the borrower to pay less every month or to reduce the term of their mortgage considerably, for very little sacrifice of savings interest.

This is the modern Bank of Mum and Dad, where parents can help their kids onto the property ladder in a sensible way. And, when the kids can stand on their own two feet, Mum and Dad will not have spent a penny.

Chris Edwards, head of mortgages and savings at Yorkshire says: “With interest rates at an all time low it’s great news that customers are realising the benefits of offsetting savings to their mortgage. The success we are seeing with our offset account doesn’t surprise me as it’s a really good way to help a family member or friend with their mortgage without having to hand over large sums of money.

“With offset, the money is not actually given to the borrower, instead it is deposited into the saver’s separate savings account, which is linked to the offset mortgage. The saver retains full control of their money and is able to make withdrawals and deposits at anytime in the usual way.

“Offsetting is also very tax-efficient, especially for higher-rate taxpayers as savers don’t earn any interest on their savings so they do not pay any tax on their offset plus savings either.”

SOURCE: Yorkshire, 21/05/09

To stay abreast of current trends, news and comment on offseting mortgages visit the Offset Mortgage Blog.