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Product matters

Standard Life Bank&#39s Offset takes the development of offset mortgages to the next stage. I am referring to the fact that Standard Life is offering offset on a range of products -all five of its Freestyle range of flexible discount mortgages. Every other lender which offers offset has a single specific offset mortgage, priced differently to the rest of their core product range.

However, Standard Life offers a choice of whether to manage the same mortgage on an offset or flexible basis, although there is a £150 fee if the offset option is chosen.

An Offset reserve (savings account) is set up alongside the mortgage and this can be operated either online or by telephone, with money moved in and out via BACS. Freestyle Offset customers will have all the flexible features of Freestyle – overpayments, payment holidays and drawdown.

As most people choosing an offset mortgage will be taking a longer-term view, the five-year discount of 0.44 per cent (minimum loan £100,000), giving a current pay rate of 4.56 per cent, is likely to be a good choice and offers good value to those for whom an offset mortgage makes sense.

This mortgage will not suit those wanting instant access to their funds as no ATM card is provided but many borrowers will be happy to operate their offset reserve online or by phone. Finally, it would be helpful if Standard Life automatically dropped the 0.2 per cent rate loading on loans over 90 per cent if the LTV falls below 90 per cent as a result of property price increases, based, say, on Land Registry statistics.

Ray Boulger is senior technical manager at Charcol

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