Natwest has said this will allow brokers to offer their homeowner clients the opportunity to save thousands of pounds in interest and pay off their mortgage years earlier. For example, a customer with a capital repayment mortgage of £100,000, savings of £8,000 and an average current account balance of £1,800 for the duration of the mortgage, would save over £22,000 and repay the mortgage over three years earlier than somebody with the same mortgage without offsetting.
The NatWest Offset Flexible Mortgage will be available exclusively on MTE for brokers to offer their clients. Rather than earning interest on the savings and current accounts, customers choose instead not to pay interest on the equivalent amount of their mortgage and whilst customers are offsetting balances less than the mortgage, there is no income tax to pay. This is because interest is saved rather than earned.
The NatWest Offset Flexible Mortgage is a variable rate mortgage currently offering a rate of 5.65% for loans with a facility to the value of the property of 95% or less. Customers can make lump sum reductions and overpayments each month without charge and can also request to underpay and take payment holidays.
Charles Haresnape, Director of Mortgage Sales for NatWest, said: "Offset mortgages are becoming increasingly popular and I am very pleased that we can now offer Offset to our intermediary partners. We are constantly looking to improve our mortgage range for our brokers and help them provide a wider choice of products for their clients. By allowing their clients' separate mortgage, savings and current accounts to 'talk' to each other, they will be able to save thousands of pounds in interest on their mortgage and potentially pay it off years earlier."
NatWest Offset also offers a Money Manager facility which it hopes will not only help customers keep control of their finances but make it easier for customers to avoid going overdrawn, as long as they have sufficient funds in their nominated savings account. Money Manager moves money into customer's current account when they need it and moves funds into a customer's savings account on a regular basis when they don't.