The Cheltenham & Gloucester offset mortgage is available to customers of Cheltenham & Gloucester and Lloyds TSB. The offset mortgages are offered through Cheltenham & Gloucester. The bank advises that its Cheltenham & Gloucester offset mortgage can be linked to Cheltenham & Gloucester offset savings accounts or to Lloyds TSB savings and current accounts.
The maximum loan to value on the Cheltenham & Gloucester offset mortgage is 95 per cent, with loans of up to £1 million. The interest rate on the Cheltenham & Gloucester offset mortgage, which is a tracker mortgage, is 0.9 per cent above the Bank of England base rate, to give a current annual percentage rate (APR) of 6.7 per cent.
Borrowers who take out a Cheltenham & Gloucester offset mortgage keep their mortgage, current and savings accounts separate. Both banks have offset versions of their current and savings accounts and it's easy to convert.
The fees on the Cheltenham & Gloucester mortgage account include:
Some fees are waived for house purchases and remortgages, but waivers may only last for a limited time. The Cheltenham & Gloucester offset mortgage also permits overpayments, with free payment holidays once borrowers have overpaid. The Cheltenham & Gloucester offset mortgage also allows instalment breaks, though too long a break could adversely affect borrowers' credit report. However underpayments and payment holidays could increase the mortgage term and/or the total amount payable.
For those who are interested in buy to let, there are suitable Cheltenham & Gloucester offset mortgage deals. Product fees range from £499 to £699 depending on customers' status.
The buy to let deals in the Cheltenham & Gloucester offset mortgage range are available at a loan to
value of 85 per cent (or 65 per cent if the property is a new build flat). Only three buy to let mortgages can be held with Cheltenham & Gloucester. The maximum loan is based on either the borrower's income plus half of the expected rental income or 125 per cent of the monthly mortgage interest payment. Buy to let borrowers must have a pre-tax income of at least £25,000.
With the Cheltenham & Gloucester offset mortgage, borrowers can also link family and friends' savings accounts to really maximise their offsetting. According to the bank, Cheltenham & Gloucester offset mortgage are particularly suited for savers who are higher rate taxpayers, who are self-employed or who get bonuses at work. Lloyds TSB's examples indicate that someone a mortgage of £100,000 with an APR of 5.7 per cent who has savings of £20,000 could save nearly £30,000 in interest over a 20 year term and could repay 3 years and seven months early*.
Availability of high street branches
Must take out a Lloyds TSB current or savings account
No early redemption penalty period
