Are You Offset By Offset Mortgages?

Offset mortgages used to be a niche product, but that’s no longer the case. There are a whole lot of lenders in the market and borrowers can pick and choose from a variety of flexible features. And don’t worry – you don’t have to give up the security of knowing exactly what you’re going to pay. Once upon a time offset mortgages were only available with tracker rates and you had to pay a high price to get them. But that’s simply not true now. Some lenders make no distinction between their offset rate and their standard rate while others allow you to fix your payment for a long, long time.

Take First Direct, for example. The ever popular online lender announced a fixed rate offset for ten (count them) ten years. Bung your £5,000 plus savings into a linked account and you could save nearly £300 a year over a standard mortgage, says the lender. The First Direct fixed is available at 5.19 per cent and you can overpay and borrow back to your heart’s content.

If you don’t want to fix the rate as long (remember that there are usually early repayment charges on fixed rate deals) then another recent entrant is the two year fixed rate from Scottish Widows. Interest rates are 5.45 per cent or 5.99 per cent, depending on the loan to value, until October 2008. Overpayments come as standard.

The smart money for the future of offset, though, is on tracker mortgages, with recent research showing an increase in the number of Brits looking for these deals. Lenders have responded with a slew of short, medium and long term tracker deals, including quite a few lifetime trackers. A recent example is Woolwich’s Openplan at 0.39 per cent above base rate for life. So, don’t be offset by offset. Shop around and there’s sure to be an offset deal that suits your budget.