This new style mortgage enables borrowers to save money on their mortgage by offsetting their savings against the loan. This has the immediate benefit of reducing the amount of interest borrowers pay each month on their mortgage, but it also has the long-term advantage of allowing them to pay off the mortgage early. And as no interest is paid on the savings, there is no tax to pay - a further boost for borrowers.
The Offset Mortgage, where interest is calculated on a daily basis, has the added attractions of giving borrowers the opportunity to make overpayments or underpayments, as well as to take payment holidays.
The Offset Mortgage also has the feature of permitting family members to link their savings to the borrower’s mortgage, so assisting first-time buyers to get a foothold on the housing ladder.
The West Brom’s Offset Mortgage tracks the bank base rate at 0.25% above the rate for the initial six months, then 0.75% above bank base rate for the remainder of the mortgage term.
It also comes with a refunded valuation fee, ‘fees free’ legal costs for re-mortgage cases, 6 months free Loan Protection insurance, and an arrangement fee of £199.
In the opinion of Mark Lowndes, the West Brom’s Research and Planning Manager, the features attached to the Offset Mortgage are likely to make it a very popular product on the mortgage market. As he said: "Many borrowers are looking for flexibility, which is why the Offset Mortgage is the ideal product for them. The Offset Mortgage really is a mortgage for life as it can adapt to meet the changing needs of the borrower, putting them in greater control of their financial affairs."