The Woolwich which pioneered the ‘city mortgage’ in October with its ‘buy now offset your bonus when you get it’ deal, has launched a new product for the larger loans market (over £500,000) as bonuses start to become reality rather than a future hope.
‘City Mortgage 2’ is Woolwich’s lowest ever lifetime tracker offset rate. It takes over from the initial ‘city mortgage’ which offered a nine month discount followed by a lifetime tracker at a higher rate. The lifetime rate will track base rate at +0.34 per cent with an initial rate of 5.34 per cent.
Andy Gray, head of mortgages for the Woolwich, said: “As December is the month that the first 2006 bonuses are set to be paid this new product allows customers to immediately offset their bonus against mortgages over £500,000. It makes sense to change the product to a simple tracker at lower rate as this will be of the most benefit to customers. For a city worker receiving a bonus of £50,000 they could save over £100,000 interest and chop four and a half years off their mortgage by offsetting.”
The ‘city'’ mortgage is designed as an offset facility to provide a tax efficient home for this year’s bonus by offsetting it against the loan and reducing the amount of interest charged. The key product details for the ‘City’ mortgage:
- This mortgage gives ‘city workers’ flexibility to purchase properties before their bonus gets paid to give them the opportunity to secure the property now before it sells.
- Fully flexible offset mortgage: overpay, underpay, payment holidays, offsetting balances in saving and current accounts.
- City workers will get an effective interest rate of 8.90 per cent as a higher rate tax payer, a tax efficient home for savings.
- No early repayment charge
- Available to all existing and new customers; with no fees to pay
- 85 per cent loan to value
- Minimum loan size £500,000
- Application fee £995
