Yorkshire Building Society Offset Mortgage, Does It Save Money?
The Yorkshire Building Society offers a range of offset mortgages which allow borrowers to offset their savings against their mortgage. In order to have a Yorkshire Building Society offset mortgage, borrowers musts also have at least one savings account with the building society.
What The Yorkshire Building Society Offset Mortgage Offers
Yorkshire Building Society offers six regular offset mortgage products. Two of these are tracker mortgages and four are fixed rate deals.
- The offset full term tracker is available at a maximum loan to value of 95 per cent, though borrowers who borrow less than 90 per cent of the property price will avoid the higher lending charge on mortgages over 75 per cent loan to value. There is a product fee of £995 and the overall cost is 5.75 per cent APR. There are no early repayment charges.
- The same product is also available with fee assistance at an APR of 5.7 per cent. In this guise, there is no product fee, no higher lending charge on some deals but there is an early repayment charge. Home movers get £500 paid into their offset savings account on completion. New customers may choose to have their standard valuation fee refunded into their savings account and free legal services instead.
- All four fixed rate deals have fee assistance and are fixed for two, three or five years. After that time the mortgage rate will be 0.9 per cent over the Bank of England's base rate, giving an overall cost of between 7 per cent and 7.5 per cent. Early repayment charges apply to all of the products, on a sliding scale of 5 per cent to 3 per cent depending on the repayment date. The 95 per cent and 100 per cent loan to value products do not have product fees nor the higher lending charge.
Flexible Offset Mortgage Features
Like other mortgage offset deals, all Yorkshire Building Society offset mortgage products feature daily calculation of interest and have flexible features, such as allowing overpayment, underpayment (after overpayment) and payment holidays (after overpayment). Underpayments and payment holidays must be agreed in advance and are available only up to the previous overpayment limit.
Interest is still charged when underpaying or taking a payment holiday. However, overpaying borrowers who wish to cut down on their mortgage term rather than reduce their payments have to phone the building society to make this arrangement. Remember underpayments and payment holidays could increase the mortgage term and/or the total amount payable.
Linking Savings To An Offset Mortgage
Yorkshire's offset savings accounts can be opened with a nil balance and can have up to 100 per cent of the borrower's offset mortgage balance. Although borrowers do not earn interest on their savings, they only pay tax on the difference between their offset mortgage balance and their offset savings balance. Borrowers also receive an ATM card for instant access to their savings.
Family Offset Mortgages
Yorkshire has also recently launched a product which allows borrowers to offset not only their own savings, but those of their family and friends, against their mortgage balance. These accounts remain linked, but separate so that a borrower's family and friends always have access to their own money. Since borrowers must have one offset savings account in their own name and can link a maximum of three to their offset mortgage, this means they can link two other accounts, giving the benefit of a higher savings balance to be offset against the mortgage loan. Savers won't get any interest on their savings, but neither will they pay any tax. This will not affect the size of the mortgage borrowers are able to get.
Who Benefits From A Yorkshire Building Society Offset Mortgage
A Yorkshire Building Society offset mortgage can help people who want to pay off their mortgage quicker or who want to reduce their monthly mortgage payments. Savers will see particular benefit. Yorkshire estimates that someone with an £80,000 repayment mortgage could pay it off two years early by saving £1.50 a day.
Please note that The Offset Mortgage Centre cannot advise on or arrange mortgages from the Yorkshire Building Society.
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Pro's
Good range of products
Con's
No cheque book facility and no linked family accounts
Features
Overpayments/underpayments and fee assistance with new one's
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