170,000

Offset mortgages - using your savings to reduce home loan interest payments - are becoming increasingly popular, according to the latest figures from the Council of Mortgage Lenders (CML). Last year, 170,000 offset mortgages worth nearly [pound]30bn were taken out - equivalent to 7 per cent of all new lending - the CML said.

The market grew 49 per cent by value in the 12 months to the end of March, compared with the previous year, while non-offset mortgages increased by just 15 per cent.

Offset deals allow borrowers to make over- and under-payments, while by paying less interest, they can repay their mortgage debt sooner. They also pay no tax on their savings.

Melanie Bien at broker Savills Private Finance said offsets were a "useful, flexible choice" for higher-rate taxpayers with "significant savings". But she warned that lower-rate taxpayers with little in the way of savings will not benefit, as such deals tend to have a higher rate of interest than standard residential mortgages.

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