New fee free offset mortgage from First Direct

19 August 2008 / by Rachael Stiles
First Direct has launched a new offset mortgage which does not charge a fee and tracks the Bank of England base rate for the entire loan term.

The tracker mortgage, available from today, will remain at 0.99 per cent above the Bank of England base rate for the life of the loan, currently offering a rate of 5.99 per cent.

In addition to not charging a fee, the offset mortgage is also linked to the customer's savings and current account balances, so that the borrower only pays interest on the difference, reducing the total amount owed and the total interest payable.

As an example, a customer requiring a £100,000 mortgage who had £20,000 in the bank would only pay interest on £80,000 of the loan. However, the deal is not available to first time buyers, only to those looking to remortgage their home.

"In the current market conditions the costs of a new mortgage can prove too much of an extra burden to customers." said Chris Pilling, chief executive at first direct. "Our new fee free offset tracker offers a great mortgage rate with no costs at all, apart from the loan itself.

"Also with the offset facility it means that even if customers only credit their salary every month with no extra savings they will be better off than with the equivalent non offset mortgage at the same rate."

Other market leading mortgage deals available include the variable tracker rate mortgage from Birmingham Midshires, offering a rate of 5.59 per cent with a maximum Loan to Value of 75 per cent.

In its price war with Abbey, Halifax has launched a competitive tracker mortgage available through brokers at 5.59 per cent; it has withdrawn its fixed rate mortgages and replaced them with rates reduced by 0.35 per cent.

LV is offering a flexible equity release mortgage, with rates of 6.75 per cent for the life of the loan.

In the buy-to-let mortgage arena, the Bank of Scotland is offering new fixed rate deals at rates of 6.99 per cent, with maximum LTV of 85 per cent.

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