First Direct launches offset base rate tracker
by Gill Montia
First Direct, part of the HSBC group, has launched a fee-free offset base rate tracker mortgage.
Interest remains at 0.99% above base rate for the term of the mortgage (currently 5.99%) and the lender promises an immediate rate change, following a Bank of England announcement.
The loan is only available to remortgagers and is linked to a borrower’s savings and current account balances.
Interest is paid on the difference between these balances; for example, a customer taking out a £100,000 mortgage but with a combined current and savings account balance of £20,000 would pay interest on £80,000.
According to First Direct’s chief executive, Chris Pilling, even customers that have no savings and are only crediting their monthly salaries will benefit from the offset mortgage, compared to a non offset loan at the same rate.
The mortgage is portable and has a maximum loan-to-value ratio of 80%. Overpayments are unlimited and can be made either by lump sum or by regular instalments.
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