Mortgage customers who opt for an offset home loan might be wise to consider taking on a lodger.
According to First Direct, those who allow a paying guest to stay in their spare room for five years could knock 29 months off their mortgage and save more than £1,000 in interest.
The government has launched the Rent a Room scheme, which allows homeowners to let out a furnished room in their home up to the value of £4,250 per year without any tax implications.
This means those with extra space could make up to £354 per month, which could be used to make overpayments on a mortgage.
First Direct senior mortgage product manager Richard Tolchard explained: “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.”
Meanwhile, Property Hawk recently claimed that those letting out properties should aim to buy homes that will be suitable to families, as these are likely to be the type of people looking for letting accommodation in the future.