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Offset mortgages could give more protection against debt than ISAs

05/05/2010

Homeowners who place their savings in a mortgage `offset` account could be significantly better off over time than cash ISA savers, according to research from first direct.

It found that over the last ten years, typical cash ISA savers who also hold a mortgage would have been better off by around £3,306 had they placed their maximum cash ISA allowance into a mortgage offset account instead.

Richard Tolchard, senior mortgage product manager at first direct, commented: "For people without a mortgage, or possibly nearing the end of their mortgage, cash ISAs are often the most efficient way to save cash.

"However, for savers who hold a mortgage, this analysis show that cash savings work harder offsetting against a mortgage than they do within a tax-efficient ISA."

An expert at Debt Advisers Direct said this highlights the importance of choosing carefully when it comes to saving money.

"Savings can offer a lot of protection against debt, so it makes sense for savers to look around and find the best place to put their money. As we can see from this research, making the right decision can make a big difference, which means more security in the future."

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

More than 4 million fear they`ll be made redundant 16/12/2010 - According to R3`s quarterly personal debt tracker, more than 4 Consumers took on more mortgage debt in July 26/08/2010 - Consumers took on £2bn more mortgage debt than they repaid Debts called in by parents 26/08/2010 - According to research, `the bank of Mum and Dad` is Teenagers `scared of debt` 19/08/2010 - Nearly two thirds of teenagers are `scared` of debt, according