Consumers are being urged to consider offset mortgages in order to see a greater return on their cash.
Yorkshire Building Society has increased its market share on this type of product, accounting for one in 10 new offset mortgages nationally.
The Society offers an offset on all products across its range of mortgages, usually priced at 0.2 per cent higher than the non-offset equivalent mortgage, including a two year fixed rate deal at 1.89 per cent and a five year fixed rate deal at 2.64 per cent. These are available up to 65 per cent LTV (loan to value).
“While mortgage rates are at their current historic lows we have been finding borrowers are keen to pay down debt where possible,” said Yorkshire Building Society product manager Brendan Gilligan.
“All our mortgages allow for overpayment each year up to 10% of the loan amount without penalty, which is great if you have the money available and are able to tie it up in your mortgage.
“Offset gives you a similar benefit in terms of bringing down your monthly repayments, or reducing your mortgage term, but with the added flexibility of retaining instant access to your savings should you need them later.
“We have been providing offset mortgages for more than a decade but many people still think the product is complicated or they need a lot in savings to make a difference, when neither is true.
“Depositing as little as £50 per month in your offset savings account can add up to a significant cost saving on the mortgage and there is no limit on how much can be saved.”
Offset mortgages work by offsetting a borrower’s savings against the amount they own on their mortgage, so they only pay interest on the difference between the two.
This can be a tax-efficient way to save, as the borrower pays less interest on their mortgage when they offset, rather than earn interest on their savings, on which they would pay tax. Borrowers have instant access to cash in their offset savings account without notice or penalty, which provides extra peace of mind for family members, such as parents or grandparents, who can harness their savings through the Yorkshire’s Offset Plus option to help bring down their child or grandchild’s mortgage costs.
