Woolwich launches new City Mortgage

The Woolwich which pioneered the ‘City Mortgage’ in October with its ‘buy now offset your bonus when you get it’ deal, is this week launching a new product for the larger loans market (over £500,000) as bonuses start to become reality rather than a future hope.

‘City Mortgage 2’ is Woolwich’s lowest ever lifetime tracker offset rate. It takes over from the initial ‘City Mortgage’ which offered a nine month discount followed by a lifetime tracker at a higher rate. The lifetime rate will track base rate at +0.34 per cent with an initial rate of 5.34 per cent.

Andy Gray, head of mortgages for the Woolwich, said: “As December is the month that the first 2006 bonuses are set to be paid this new product allows customers to immediately offset their bonus against mortgages over £500,000. It makes sense to change the product to a simple tracker at lower rate as this will be of the most benefit to customers. For a city worker receiving a bonus of £50,000 they could save over £100,000 interest and chop 4 and a half years off their mortgage by offsetting.”

The ‘City’ mortgage is designed as an offset facility to provide a tax efficient home for this year’s bonus by offsetting it against the loan and reducing the amount of interest charged. The key product details for the ‘City’ mortgage:

This mortgage also gives ‘city workers’ flexibility to purchase properties before their bonus gets paid to give them the opportunity to secure the property now before it sells.

Fully flexible offset mortgage: overpay, underpay, payment holidays, offsetting balances in saving and current accounts.

City workers will get an effective interest rate of 8.90 per cent as a higher rate tax payer, a tax efficient home for savings.

No early repayment charge

Available to all existing and new customers; with no fees to pay

85 per cent loan to value

Minimum loan size £500,000

Application fee £995