Simon and Ellen Porter don’t have a savings account for their rainy day fund — they use the money to offset their mortgage.
They took out a 25-year interest-only offset loan with Coventry Building Society when they bought their £427,000 four-bedroom home in Portishead, Somerset, in 2011. The mortgage has a linked savings account where, instead of earning interest, any money they deposit is “offset’ to reduce the amount they are paying for their loan. If you had a £100,000 mortgage and £40,000 in an offset savings account, you would only be charged interest on £60,000.
The Porters, who work in finance, had about £65,000 in savings which reduced their initial monthly mortgage repayments from about £580 to about £440. They have paid off chunks