With this option, monthly mortgage payments will always stay the same - subject to changes in interest rates.
However, because the savings in the Offset Saver Account are offset against the mortgage, more of the monthly payment is used to repay the balance of the mortgage, which makes it possible for your client to pay off their mortgage sooner. And they could save thousands in interest payments too.
The table below gives a specific example of the offsetting benefit reduced term could help achieve.
| | Without offset | With offset |
| Savings offset against mortgage |
|
£15,000 |
| Monthly mortgage payment |
£824.44 |
£824.44 |
| Total amount payable |
£247,284.27 |
£208,583.32 |
| Mortgage interest saved |
|
£38,763.09 |
| Mortgage term reduced by |
|
3 years 11 months |
Illustration based on £130,000 repayment mortgage with a variable rate of 5.75% and £15,000 in an Offset Saver Account over a 25 year period. Also includes a £999 product fee and £25 CHAPS fee. This illustration is based on an example interest rate and is not necessarily the current rate offered by Scottish Widows Bank. The overall cost for comparison is 5.9% APR.
With this option, the monthly mortgage payment could be reduced, giving more disposable income. This is because the savings in the Offset Saver Account are used to reduce how much your client would normally pay each month. The term of the mortgage remains the same.
The table below shows you how your client could benefit from reduced monthly payment.
| | Without offset | With offset |
| Savings offset against mortgage |
|
£20,000 |
| Monthly mortgage payment |
£607.92 |
£519.75 |
| Total amount payable |
£178,852.15 |
£155,087.45 |
| Mortgage interest saved |
|
£23,764.70 |
| Mortgage term reduced by |
|
0 years 0 months |
Illustration based on £100,000 repayment mortgage with a variable rate of 5.29% (reverting to 5.00% standard variable rate after 5 years) and £20,000 in an Offset Saver Account from month one over a 25-year period. Also includes a £999 product fee and £25 CHAPS fee. This illustration is based on an example interest rate and is not necessarily the current rate offered by Scottish Widows Bank. The overall cost for comparison is 5.3% APR.
Important information about reduced monthly payment
With reduced monthly payment as the offset benefit, your client's mortgage payments will be adjusted from their second mortgage payment - the first mortgage payment will always be collected in full. On an ongoing basis, the offset benefit will be calculated for each full calendar month and your client's mortgage payment will then be adjusted accordingly at the end of the following month. We'll write to your client each month to advise you how much their next mortgage payment will be.