It could be time to offset your mortgage

With the base rate at 0.5%, savings rates are low, but so are mortgage rates, so now could be the time for many homeowners with savings to consider offsetting, says Nick Scarrett, head of pensions and investments at Fair Investment Company.

"When you have debt, i.e. a mortgage, and you also have savings, it only makes sense to keep those savings where they are when you are getting a good rate of interest on them. But at the moment, many people will be paying more interest on their mortgage than they are earning on their savings, and this doesn't make financial sense.

"In these situations, it is worth paying off your debts if you can - monthly overpayments or a one off lump sum overpayments on your mortgage can really cut down your loan and/or the duration of your loan. But if you are not happy using all your savings to pay off your mortgage, it is worth considering offsetting.

"Offset mortgages link the balance of your mortgage to money held in savings, which allows you to ‘offset' the credit balances in your current and savings accounts against the mortgage balance, so that interest is only paid on the difference.

"Those without mortgages, or with little left to pay are certainly better off utilizing their ISA allowance - this is the most tax efficient way to save," says Nick, "But people with a mortgage and savings could get more from their money by offsetting."