Borrowers can elect for a lower monthly payment, keeping the term unchanged. The offset mortgage also allows for overpayments on a one-off or regular basis, with the extra credit available to reduce payments at a later date.
The new option is an alternative to the existing feature that allows borrowers to use savings to shorten the term of the mortgage. In this scenario, if the customer borrowed £200,000 and held £40,000 in the savings account, they would only be charged for interest on £160,000.
Keith Barber, director of business development at the Family Building Society, said the product had been enhanced following feedback from customers and mortgage brokers.
“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,” he said.
“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,” he added.
