Homeowners with offset mortgage benefit from lodgers

If you've gone in for an offset mortgage and also have a spare room in your home then you should give some serious thought about renting it out, as you could reap the financial rewards.

You can use the monthly rental payments in order to make monthly mortgage overpayments. This way, using first direct's range of new offset mortgage rates as an example, you could save over £1,028 in interest over five years, and importantly cut down on the term of your mortgage by 29 months.

Under the Government's Rent a Room scheme, homeowners can let a furnished room in their house up to the value of £4,250 per year and not pay tax on it. Everyone's a winner – reasonably cheap rent, and homeowners with that extra space on their hands could earn an extra £354 per month towards their mortgage costs.

Richard Tolchard, Senior Mortgage Product Manager at first direct, has this to say about getting a lodger in to help with mortgage repayments. 'As long as all necessary precautions have been taken, having a lodger is a really easy way for homeowners to earn more cash and reduce the term of their mortgage.

'The added benefit of first direct's flexible offset is that if homeowners need access to the money they've overpaid they could redraw up to the original amount of the mortgage borrowing.'

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