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Offset mortgages are valuable with low savings rates – Scottish Widows

by: Claire Scott, head of business development at Scottish Widows Bank
  • 23/08/2019
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Offset mortgages are valuable with low savings rates – Scottish Widows
A number of years ago it would have been difficult to predict that offset mortgage rates would sit at the low levels they are at today.


In the short time that I have been in my new role here market expectations of the next base rate rise have changed completely.

It now seems there is more chance of a rate cut than rate rise.

Having clients’ savings linked to their mortgage can be more valuable than having them locked into a savings plan in such a low savings rate environment.

Borrowers can benefit from reducing the balance on which they pay interest using an offset mortgage, potentially saving them thousands of pounds or even benefiting from a reduced mortgage term.

For higher rate taxpayers this benefit may be even greater.


Income changes and bonuses

Brokers can use an online calculator to visually show borrowers just how much they could save each month by offsetting and there are many different circumstances where brokers have found offset to be the perfect match for clients.

These commonly include customers who are expecting changes to employment or income in the near future, or those who are looking to help their children with their first-time buyer deposit.

Clients who receive bonuses as part of their annual salary have also benefited.

Their bonuses can be placed in the offset facility reducing the interest paid but still be available for them to use as they choose and as their needs change.


Self-employed and savings

Self-employed borrowers currently represent more than 15 per cent of the UK workforce but many may not fit the ‘tick-box’ approach taken by some lenders.

Bespoke underwriting for multiple income streams is available and clients can also save for their end-of-year tax bills and benefit from the same interest savings.

Looking forward into what is currently such an uncertain world, I am confident that offset can provide such a flexible way to meet customers’ changing needs and give them the comfort that it is there to help.


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