The Family Building Society’s offset mortgage has been tweaked following feedback from customers and mortgage brokers.
The mortgage was first offered to customers earlier in the year.
Offset mortgage borrowers will now be able to use savings to offset against their mortgage to reduce their monthly payments.
This is an alternative to the existing ability to use savings to shorten the term of the mortgage whereby if one borrowed £200,000 and the borrower, parent or another close family member deposited £40,000 in to the offset savings account, interest is charged only on £160,000. In effect, the borrower pays back more of the money borrowed each month, which can have a large effect on how quickly the mortgage is paid off.
Alternatively, under the new option, borrowers may elect for lower monthly payments, keeping the term unchanged. The offset mortgage also allows overpayments on a one-off or regular basis. The extra credit can be used to reduce payments at a later date.
Keith Barber, director of business development at the Family Building Society, said: “Our aim is to provide a flexible response to the needs of today’s borrower. For the self-employed, first time buyers and other borrowers whose family members wish to help them reduce the cost of owning their home, our Offset Mortgage is compelling.
“It is ideal for the self-employed, who have to keep money for tax aside during the year and can struggle to get through purely computer-based credit assessments of some of the larger providers.
“It’s also another viable option for those who have put away money for a specific purpose, such as for a wedding or a special birthday, and who can now reduce their monthly payments or the mortgage term in the meantime.
“Our goal is to make available flexible, easy to understand ways of helping people into the homes they want and to treat every potential borrower as an individual. Our experienced underwriters use their knowledge and insight to consider each mortgage application on its own merits. It is this highly personal service that allows us to help better serve our customers’ needs.”