Homeowners could collectively save themselves £850 million by making the move to offset mortgages, according to new figures.

A quarter of borrowers could save themselves £370 on the cost of repayments in the first year alone, according to calculations from Intelligent Finance.

Offset mortgages work by deducting the value of a customer's savings and current account from the cost of their loan.

This could benefit homeowners with as little as eight per cent of the value of their mortgage in savings. In fact, offsetting £10,000 in savings against a £100,000 mortgage could produce savings of £20,177.74 over the term of a mortgage.

The figures also show that the higher a household's income the more likely it is to benefit from an offset mortgage. Almost half of homes with savings equivalent to three times their monthly income could also save themselves money.

Nick Robinson, Intelligent Finance managing director, said: "While offset mortgages are growing in popularity, many people find it hard to quantify the potential benefits they can offer - yearly savings, flexibility, and tax benefits, to name but a few.

"This research puts to rest the myths surrounding offset, while revealing that millions of people in the market for a mortgage could be better off offsetting."

Three in five people who hold a building society savings account would find that an offset mortgage could save them money within the first 12 months whilst almost one in two people with an ISA would find themselves better off by the end of year.