Woolwich Cuts Rates On Its Offset Mortgages

Barclays Woolwich is reducing the interest rate on its offset mortgages by up to 0.5%.

On their offset mortgages with up to 75% LTV the interest rate is being cut by 0.5% to 2.79% above base rate.  The rate for a 70% LTV offset mortgage reduces to 2.48% above base rate.

Offset mortgages are suitable for anyone who pays tax, or has at least 5% of their mortgage balance in savings or is self employed or invests in Individual Savings Accounts (ISAs).

Other benefits also include keeping the savings accessible, as many customers don’t want to commit to a long term bond or a traditional mortgage where you have to overpay. With offset, the money is always accessible but cuts the mortgage interest rate automatically.

Laoiseach Lynch, Head of Mortgage Products at Barclays commented: “Offsetting is the most tax efficient way to manage both savings and a mortgage so it makes sense for borrowers to look at these options.

Also, the added benefit of repaying your mortgage earlier could save you money in the long run, which is good news in any economic climate.”

Comparing with a £150,000 repayment mortgage over 25 years, homeowners with savings of £20,000 who switch to the new 2.48% offset mortgage could save £47.36 a month or over £14,000 over the loan term.

MoneyHighStreet.com comment: As we covered yesterday, when considering which mortgage is best for you, make sure you look beyond the headline rate and find out the true cost of your prospective mortgage. Across the mortgage market lenders have generally sought to offer lower headline interest rates and to offset this have moved to increase their mortgage fees.