Leeds Building Society reduces offset mortgage rate

| December 6, 2011 | 0 Comments

Leeds Building Society has announced a reduction in the rates on its Direct Only Offset 2 Year Discount mortgage by up to 0.25 per cent.

The building society’s 75 per cent loan-to-value offset mortgage now offers a rate of 2.65 per cent.

In order to help customers with upfront costs, the building society has launched new fee assisted options on its Direct Only Offset Fees Assisted 2 Year Discount.

Offset mortgages are popular with house buyers who wish to pay off their mortgage early.

They allow customers to use the interest on their savings to help pay off their mortgage.

This is a tax-efficient system as savers no long have to pay tax on the interest their savings earn and there is the added advantage that mortgage lenders calculate interest daily, so every pound on deposit is working hard to reduce the mortgage debt.

Manchester Building Society has also moved into the offset mortgage market with the launch of a 2.99% offset mortgage with an arrangement fee of £495 which is payable on completion.

The initial 2.99% interest rate includes a discount of 1% for two years from its newly established offset managed variable rate of 3.99%.

David Cowie, chief executive of Manchester Building Society, said: “Unlike most other offset products we allow mortgages of up to 80% LTV, rather than 75% LTV or less, with the added attraction that both the initial 2.99% discounted interest rate and the 3.99% reversionary rate are highly competitive.”

Although offset mortgages offer a number of advantages, they are of most benefit to people with substantial savings.

Conventional mortgages may be more competitively priced for house buyers whose savings are limited.

It is estimated that borrowers pay a premium of around 1 percentage point for an offset loan.

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