The Family Building Society is introducing a new offset mortgage that customers can link to their savings account and make better use of their assets.
The new offer is available for home purchase or remortgage and is also suitable for self-employed and first-time buyers.
One of the advantages to connecting a savings account to the mortgage is that borrowers are able to lower the amount of interest they pay. Because the money held in the savings account is deducted from the total mortgage, the interest is charged on the lower amount. The savings account to which the mortgage is connected could be the customer’s own, one of their family member’s or a combination of the two.
Another advantage to the offer is the flexibility of repayments. The borrower can make overpayments each month. This allows them to later either pay less or nothing until their credit runs out. They also could borrow a lump sum back if they need. This makes the offer ideal particularly for self-employed whose monthly income often fluctuates.
First-time buyers or existing customers that have family members wishing to help them may have up to four separate savings accounts linked to the mortgage.
Borrowers need £100 to open the savings account. The account is managed exclusively online and it does not earn interest. Withdrawals can be made without penalty or having to give notice.
Borrowers can offset the whole amount of the mortgage if they have the necessary funds in the savings account and wish to do so.
“We believe that linking a mortgage to savings accounts is an excellent way to help the self-employed or families, in particular, make more efficient use of money held in their savings accounts.
“So it can also be a great help to younger borrowers whose families have savings and want to help them without necessarily giving them cash outright,” Keith Barber, director of business development at the Family Building Society commented.
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