The offset mortgage provided by The Family Building Society has been improved, helping borrowers to reduce their monthly payments.

The facility allows borrowers to lower monthly mortgage payments by offsetting their savings against the loan. Rather than reducing the term of the loan, borrowers may elect to lower their monthly repayments. In addition, it is possible to make overpayments without incurring a penalty, so that the extra paid may be used to lower payments at a future date.

Usually, an offset mortgage would use the savings to reduce the term of the product. In this case, the savings are used to reduce the interest charged. For instance, a mortgage of £150,000 and savings of £20,000 would result in interest only being charged on £130,000. An offset savings account has to be opened with a minimum amount of £100. According to experts, to be really effective, borrowers must have a reasonable level of savings in the account.

The product offers flexibility and may be an alternative for those with unpredictable earnings, like self employed who need to set aside an amount for income tax during the year. People with unpredictable income are often penalised based on a computer generated credit score, so the flexible nature of the enhanced offset mortgage may be an alternative.

Mortgage advisers have to maintain a knowledge bank of products like this, so they can help their clients to find a suitable product. To ensure that all knowledge is retained, advisers are expected to undertake CeMAP Training.

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