Research from first direct reveals that 40% of homeowners don’t understand the basic idea of an offset mortgage and a further 35% only roughly know how they work.

The direct bank is concerned that consumers may be missing out on saving money and reducing the term of their mortgage, with only 21% seeing offsets as a way they can save money on their mortgage.

Findings from first direct show that swapping to an offset mortgage could cut down the length of a £100,000, 25 year mortgage by four years and save £24,232 in interest payments over the lifetime of the mortgage.

First direct’s head of mortgages, Jimmy Kelly, said: “It’s a real worry that consumers are not aware of the benefits of an offset mortgage.