The Barclays offset mortgage is very similar to the Woolwich Openplan offset mortgage, which is no surprise as the Woolwich is the mortgage arm of Barclays. According to Barclays' case study its offset mortgage deal means that someone with an £87,000 mortgage and £7,000 in savings could pay it off three and a half years early and save more
than £15,000 in interest. Of course, to achieve this, the interest rate would have to remain the same during the period and the borrower would have to have the same amount of savings as at the start of the period.
The Barclays offset mortgage is available as a tracker mortgage, with a loan to value of between 80 per cent and 95 per cent. There are three flexible offset tracker mortgage deals. The annual percentage rate (APR) is pegged to the Barclays Bank Base Rate, which at the moment is the same as the Bank of England's base rate. The initial interest rate varies between 6.19 per cent and 6.49 per cent, with the APR between 6.5 per cent and 6.8 per cent depending on the Barclays offset mortgage deal chosen.
The deals with the lowest initial interest rates have application fees of £595, while there is only one deal with no product fees and higher interest rates. None of the Barclays offset mortgage deals has early repayment charges and there is no higher lending charge. Both interest only and repayment options are available with the Barclays offset mortgage deals.
The Barclays offset mortgage deals require borrowers to have a current account with Barclays. Borrowers can also use an Openplan savings account for offsetting purposes. The Openplan savings account, which is reserved for Barclays and Woolwich offset mortgage holders, allows saver to put their money into different savings pots for different purposes. This means savers can allocate their savings to car purchase, holidays or saving for a wedding for example. With the Barclays offset mortgage up to 12 of these pots and four current accounts can be used for offsetting. Barclays offset mortgage holders can also offset their mini-cash ISA against their offset mortgage.
Barclays mortgage offset holders can also have a secured overdraft facility. This is based on the equity on their home and charges interest at the offset mortgage rate. Interest on this facility is applied to the Barclays offset mortgage account. This means that offset mortgage holders can borrow funds for major expenses such as home improvement, though like the mortgage, the facility is secured on their home.
Barclays offset mortgage deals must be repaid by the time the borrower retires or reaches the age of 70, whichever is earlier, so there could be some penalty for taking early retirement. The Barclays offset mortgage deals are also available under the Woolwch Openplan offset mortgage plan, with some minor differences. However, with both offset mortgage packages, the interest rates and repayment terms are identical*.
However, please note that The Offset Mortgage Centre cannot advise on or arrange mortgages from Barclays.
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