Keith Barber (pictured), director of business development at the Family Building Society, said: “Offsetting savings against your mortgage reduces the amount of interest charged. The effect of this, other aspects being unchanged, is to increase the profit from letting and increase the landlord’s overall net cash flow.”
The new product is a two-year discount at 2.99% with a product fee of £999. After two years the mortgage will revert to the society’s standard variable rate of 5.29%. The maximum loan to value is 65%.
Borrowers may choose one of two options, reduced monthly mortgage payments or term reduction. In the first instance, interest saved every month will be used to reduce the amount of the borrower’s next month’s mortgage payment. This option is available on interest only as well as capital and interest repayment mortgages.
The term reduction option helps the borrower to pay off the mortgage earlier, but won’t reduce the monthly payment. This option is only available on capital and interest repayment mortgages.
Barber added: “With changes to the tax treatment of mortgage interest starting this week, making best use of your resources has never been more important for landlords. This may be particularly important for retired investors relying on letting as part of their retirement income.”