Scottish Widows launches two-year offset product

The new facility will be available on its professional and flexible products and will allow customers to offset against a fixed rate until 31 October 2008. Previously, the option to offset was only available to customers on Scottish Widows Bank’s variable, tracker and discounted products.

The new two-year fixed rate deals offer up to 95 per cent loan-to-value (LTV) at a rate of 5.45 per cent and above 95 per cent LTV at a rate of 5.99 per cent. There is a customer booking fee of £495 up to 75 per cent LTV and £595 for loans over 75 per cent.

Up to 10 per cent of the loan balance may be repaid once a year by cheque without an early repayment charge. Any extra payments made to the mortgage account before the expiry date of the fixed rate period are subject to a charge equal to 3 per cent of the extra payment total. This includes repayment of the mortgage in full.

As part of its launch, Scottish Widows Bank will pay a £50 proc fee for all applications submitted between 18 September and 31 October. An offset/overpayments calculator will also be distributed to its database of 4,500 brokers from 18 September. The software enables brokers to demonstrate the benefits of offset and flexible mortgages to the client.

Commenting, Murdo McHardy, head of product development and marketing at Scottish Widows Bank, said: “In the current climate, this new product offering will not only provide a welcome safeguard of a fixed rate, but also the flexibility of an offset mortgage product.”

Paul Shearman, mortgage proposition director at Openwork, said the move was unsurprising. He said: “We have seen a sufficient increase in the level of offset business and I anticipate that this area of the mortgage market will grow steadily over the next few years.”