First direct launches offset mortgage for those looking to remortgage
The Internet bank first direct, which is part of the High Street banks, HSBC, has recently launched a new mortgage product that may prove of interest to some people that are looking to remortgage. The new offset loan has been described as a market leading fee free loan. This is a base rate tracker offset mortgage, and the interest rate is set at 0.99% above the base interest rate for the life of the loan. Consumers can also benefit from the offset feature, which could help them to save money on interest on the loan.
With many mortgage lenders having reduced their mortgage ranges and increased mortgage related costs many people looking to remortgage over recent months have hit a brick wall, as they have been unable to find a suitable loan that offer affordability. High arrangement fees have also affected consumers’ ability to get a better deal on the mortgage market, which has resulted in many having to pay over the odds on another mortgage with lower arrangement fees.
At present, with the base rate set at 5%, the new offset mortgage offers a variable interest rate of 5.99%. However, only those looking to remortgage will be able to benefit from this mortgage product. The mortgage is also linked to other accounts such as savings and current accounts, so interest on these accounts can be offset against the mortgage interest.
A first direct spokesperson stated: “In the current market conditions the costs of a new mortgage can prove too much of an extra burden to customers. Our new fee free offset tracker offers a great mortgage rate with no costs at all, apart from the loan itself. Also with the offset facility it means that even if customers only credit their salary every month with no extra savings they will be better off than with the equivalent non offset mortgage at the same rate.”
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