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10th birthday celebrations for Yorkshire offset

28th February 2012 Print

This month Yorkshire Building Society celebrates its 10th year offering offset mortgages; and with more than one in three mortgage applications at the Yorkshire being on an offset basis, it is keen to promote the clear benefits they provide for its members.

Commenting on offset provision, Mortgage Product Manager Jemma Smith said; "As the first building society to offer offset to customers, we truly believe offset provides a genuine opportunity for consumers to save thousands of pounds on their mortgage."

More than one in three mortgage applications at the Yorkshire is on an offset basis, showing borrowers can clearly see the benefits the product already provides.  This is not something which is mirrored in the market however, with a limited number of lenders offering an offset option.   So with some borrowers unaware that offset even exists, Yorkshire wants to educate those who are missing out.

Giving a clear example of these benefits Jemma continued; "But as they say the proof is in the pudding!  Using our figures as evidence of the savings which can be made, we can demonstrate the real difference taking out an offset mortgage can have on your overall finances."

She explained that in 2011 the average new offset mortgage at Yorkshire was £184,000 - of these, borrowers held an average of £51,500 in their offset savings account (or 28% of their mortgage balance).

Using the Yorkshire's offset wheel a simple calculation gives an illustration of the financial benefit this achieves;

Offset mortgage of £184,000 over a 25 year term alongside the average 28% savings (£51,500);

A reduced monthly repayment of £971
Could pay off your mortgage more than five years early
Could save £62,852 in interest charges
Offset however is not just an option for those with big savings balances.

Yorkshire figures show that savings of as little as £2,500 could shorten a £100,000 mortgage by 7 months from its 25 year term, reducing the interest paid by £4,142 (an equivalent savings rate of 5.0% for a basic rate tax payer).  It also shows that saving just £25 each month could reduce the mortgage term by 9 months, reducing the interest paid by £4,908 (also an equivalent savings rate of 5.0%) and leaving the borrower with a nest egg.

Jemma continued; "We believe this demonstrates that now really is the time for offset; due to low savings rates you can get the best overall return on your mortgage and savings accounts, whilst maintaining full flexibility.

"With competitive products that consistently achieve Best Buy mentions and the widest choice of offset mortgages, from fixed to tracker rates, 75% to 90% LTV and 2, 3 and 5 year terms we have something to suit everyone."