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Yorkshire is first mutual to offer an offset account

Yorkshire Building Society is claiming to be the first mutual to launch an offset account, combining borrowers&#39 mortgages and savings.

It also claims its mutual status lets it offer more competitive rates than rivals.

Yorkshire says, in contrast to most other offset accounts, its product offers fully flexible mortgage benefits, including underpayments and overpayments without penalty, daily interest calculations and drawdown facilities linked to simple savings accounts rather than current accounts.

Other benefits it lists are no minimum savings balance and no need for the account to be linked to salary.

It says it is offering higher than standard procuration fees to intermediaries selling the offset although it will not say how much as there are differing arrangements with individual brokers.

Interest on the combined mortgage and savings balance will be charged at Bank of England base rate plus 0.75 per cent for the first three years.The society says this rate is equivalent to a savings rate of 7.9 per cent for higher-rate taxpayers.

Up to three instant savings accounts can be offset against the mortgage. As an introductory offer, Yorkshire is paying 1 per cent of the initial loan as a cash bonus into the savings account.

Spokeswoman Tanya Mills says: “We have increased the usual procuration fee for brokers so everyone should receive a higher amount. Borrowers get a 1 per cent cash back, can link their savings to mortgages and get regular reviews on their account.”

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