Standard Life adds Offset to 2 year fixed rate mortgages

Standard Life Bank has launched an Offset feature on all new 2 year fixed rate residential mortgages.

The Offset feature is available to all new customers at the application stage.

The upgradeable feature will enable customers to offset their savings at the fixed rate of interest applicable to their mortgage. The benefit accrued will be applied at the end of the initial fixed-rate period. Once the fixed rate period on the mortgage has ended, any interest benefit gained from having money in the Offset Reserve will be calculated at the Freestyle® SVR, currently 6.76% for loans up to 90% LTV.

While interest is not paid on money in the Offset Reserve, no interest is charged on the equivalent amount of money in the mortgage either, so the total amount payable on the mortgage is reduced.

It could result in significant savings for customers. For example, a customer could save an impressive £72,217 based on the effects of offsetting £18,000 in savings against a £142,000 mortgage over 25 years and with an LTV of 75% or less. Someone with a 95% LTV would save £76,685 based on the same figures.

Jackie Moran, Head of Sales, Standard Life Bank, said: “We expect around 25 per cent of our new 2-year fixed rate customers to take up this feature.

“This is all about providing added value for our customers, who will be able to effectively enjoy the same rate of interest on their savings as on their mortgages.”