With just 102 of the 307 (33%) of the Cash ISAs currently available on the market offering a rate above 3%, changing to an offset mortgage may make more financial sense.
Kevin Bray, insight analyst at Defaqto, said offset mortgages are a good option for those looking to make their savings work harder.
He explained: “Customers taking out a £100,000 offset mortgage at rate of 2.74% and holding £20,000 in a linked savings account would only pay interest on the remaining £80,000 which could save more than £14,000 in interest and shave five years off a mortgage term. Compare this to £20,000 in a Cash ISA with an average rate of 2.40% where the return would only be less than £12,000.
“For the right offset mortgage look beyond the cheapest rate on offer. Look for specific product features that suit your financial needs as these vary enormously,” he added.
