More than one in five (22%) small business owners are striving to pay off their home loan early so they can grow their business quicker, according to research to support Yorkshire Bank's Business Offset Mortgage.
The UK wide study of small business owners and sole traders with home loans found almost a fifth (19%) would have the confidence to take business risks if they were mortgage free and over a quarter (26%) said being mortgage free in the future would encourage them to expand their business.
Yorkshire Bank's Business Offset Mortgage allows small businesses (sole traders and simple partnerships) to combine their business current account, business savings and personal account balances, to reduce the amount of interest paid on their residential mortgage. Instead of receiving interest on their credit balances, the interest payable on their mortgage is reduced by that amount.
Of those businesses surveyed the average outstanding home loan balance was £102,056 with combined credit balances of £31,708. Based on these figures, if the average small business owner swapped their home loan to Yorkshire Bank's Business Offset Mortgage they could save as much as £76,127 and pay off the mortgage nine years early.
According to Yorkshire Bank's calculations if all sole traders and small business owners in the UK with a residential mortgage were to switch its Business Offset Mortgage, they could cumulatively save over £190 billion.
Gary Lumby, Yorkshire Bank's head of retail and small business banking, said: "Offset mortgages are becoming increasingly popular for people wanting to pay off their loan as quickly as possible. We are one of the few providers to have extended the benefits of offsetting to small business owners and sole traders. People running their own businesses tend to be very financially astute and are quick to recognise a good deal that will save them money.''
Yorkshire Bank's research also found that if small business owners paid off their home mortgage early, more than one in ten (11%) would use the extra money to hire additional staff so they could take some time off and nearly a quarter (23%) said they would use some of the freed-up cash to help their children get onto the property ladder.
Gary Lumby said: "This research underlines that the financial goals and lifestyle aspirations of business owners are still not being fully achieved. Our Business Offset Mortgage can make small business owners' money work harder for them."
Further details are available by visiting the website www.ybonline.co.uk. The website also has a calculator to help potential customers work out how much they could save by switching to the new product.