Offset mortgages are always put into the ‘niche’ category of mortgages, alongside self-build, self-cert and buy-to-let, but offset shouldn’t be niche – it could improve the lives of millions of people.

Niche means an area that is only of interest and only suitable for a small, select group, and that’s fine for many mortgage types. Self-cert mortgages are only good for those who cannot prove their income, self-build mortgages are only good for those who want to build their own house and buy-to-let is only good for those looking to invest and rent out a property. But offset is much more than niche – offset could work for a large percentage of the population.

Offset allows you to take lump sums of money and ‘offset’ them against your mortgage. For example, a £100,000 mortgage, with £25,000 offset against it would mean the rate or even the term of the loan would reflect that of a £75,000 mortgage. The £25,000 has not moved and has not been spent – it’s just sitting there, as security.

With this type of loan, many choose to overpay – they continue to pay a rate that reflects the original £100,000 loan, not the new £75,000 offset amount. So each month they add towards their mortgage, shrinking the amount they owe and even the term of the mortgage.

But the loans are flexible – if the borrower finds themselves in difficulty then they can choose to pay at a rate reflect the £75,000 or even less, if the lender allows it. They can even overpay above and beyond the amount a £100,000 loan demands, reducing their debt by even more every month. There is also the chance for the borrower to stop paying completely for a short period, again if the lender allows it.

So all you need with an offset loan is savings, the ability to pay a mortgage and the desire to shrink your debt. Millions of Brits have savings and even more have the ability to pay – and everyone wants to shrink their debt. So is it niche? Not at all – offset, like any other mortgage type, may not be right for everyone but we are sure that it is right for millions of Brits looking to save and reduce their mortgage debt.

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