Getting the best return for your savings can be difficult, especially for higher rate tax payers whose savings are usually taxed as income. As such, offset mortgages can prove a very beneficial way of utilizing your savings, by either reducing your mortgage term or the interest you pay on it. They tend to prove much more flexible, especially if you’re borrowing money you will not need to touch straight away.
An offset is essentially a separate savings account to your mortgage, yet one that still links the two with no interest paid on the savings aspect. This means you receive the benefit of a lower effective interest rate on the mortgage, which is offset by the balance sitting in the savings account, but still save the amount of interest and tax you would usually pay.
For mortgages on a repayment basis, utilizing the offset pays towards the capital rather than the interest, allowing the freedom to pay off your mortgage quicker and reduce the cost of borrowing in the process.
So with all this in mind, our product of the week is an offset product that comes at an extremely affordable rate compared to the majority on offer from the high street…
Professional fixed offset mortgage product at 1.64%
One lender who we have an excellent relationship with is now offering an offset mortgage product at 1.39% above the base rate, with a rate of just 1.64%. Providing the option to lend up to 90% loan to value (LTV), this product is exclusive to professionals, such as doctors, lawyers and accountants.
When it comes to professional products, Building Societies will usually only allow you access if you pay a much higher rate, whereas this lender actually prefers you to be a professional and will reward you with reduced rates, such as these, in return.
Not only this, non-professionals tend to have restricted borrowing to 85% LTV for offset products and require a much smaller deposit, making this even more beneficial for professionals seeking finance.
Essentially, the key things to consider when it comes to this product are:
- Enhanced borrowing: allowing you to borrow up to 90% of the purchase price or valuation of a property (whichever works out lowest).
- Stretched income multiples: the opportunity to borrow much more compared to your income.
- Professional exclusivity: excellent terms compared to many others within this space with less stringent criteria.
- Affordability: a cheaper rate than usual for a professional product, with the added bonus of the offset facility to help you save even more.
- Remortgage option: remortgage packages are available, including free valuation, free legal fees and £300 cashback on completion.
This bank will also consider trainee accountants, actuaries and solicitors, so whatever stage in your profession – be it newly qualified, training or with years of experience – this product is flexible enough to adapt to your needs.
If this is something you are interested in, please do not hesitate to get in touch, where one of our expert advisers will be happy to answer any questions you may have and introduce you to the relevant lender.