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Product matters

Offset and current account mortgages are not suitable for everyone but for those who have decided they want an offset mortgage the new offering from Yorkshire is well worth considering.

With most other offset mortgages you can link at least a current and a savings account to the mortgage, as well as sometimes a loan account or credit card.

Yorkshire&#39s offset only has a savings account and a mortgage but the savings account has a cash card which allows free access to funds at most UK ATMs and also accepts direct debits and standing orders so it offers most facilities of a current account.

The interest rate of bank base plus 0.75 per cent, currently 4.75 per cent, for the first five years is one of the most competitive. After five years it reverts to Yorkshire&#39s standard variable rate, currently 5.45 per cent. Borrow-ers will then need to look at other rates.

One unique feature in the offset market which Yorkshire offers is a 1 per cent cashback up to a maximum of £2,000, which is particularly valuable on bigger mortgages up to £200,000.

An innovation which Yorkshire may be able to consider is to extend the offset concept to a fixed-rate mortgage – something which no lender currently offers.

All its non-offset mortgages are flexible although overpayments can only be accessed by payment holidays, not by drawdown, and allow unlimited penalty free early repayments with an early repayment charge only being made if the mortgage is repaid in full. It would not be a giant step to offer a fixed-rate offset mortgage, which would be a real winner.

Ray Boulger is senior technical manager at Charcol

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