The C&G Offset
Mortgage launched at the end of May has some attractive features.
Daily interest is augmented by a facility for borrowing up to 95 per cent with no indemnity guarantee, no early redemption penalty and no valuation fee.
If you are a new mortgage customer to C&G or Lloyds TSB, there is a £299 admin but this is waived for remortgage business. The product is launched as a lifetime tracker at 0.9 per cent above base rate, giving a current rate of 5.15 per cent, and has the added feature that family or friends' current and savings accounts can be offset against the individual mortgage account.
This can be particularly attractive where parents, grandparents or friends may want to give a helping hand in what is becoming an increasingly difficult housing market.
How does the mortgage fare in its market and against its competitors? The interest rate together with the features mentioned make it competitive in the growing offset market. This type of account is ideal for those self-employed saving for tax or the employed perhaps receiving bonuses and higher-rate taxpayers. But how does it compare with the mainstream market?
Taking a mortgage of £100k would cost 5.15 per cent compared with C&G's current discount rate of 4.64 per cent, a difference of 0.51 per cent. Its highest savings rate of 4.8 per cent for balances over £50k nets to 3.84 per cent. The difference of 1.31 per cent and allowing for the mortgage rate difference means the customer would need to hold more than £38,930 to benefit.
David Thomas is a partner at Chadney Bulgin