Barclays is cutting its range of Offset Woolwich mortgages by up to 0.50 percentage points
Barclays (barclays.co.uk) is cutting its range of Offset Woolwich mortgages by up to 0.50 percentage points from Tuesday, 5 April 2011, which could help homeowners repay their mortgage earlier and make them more tax-efficient.
The largest rate cut is at 75 per cent loan to value, reducing 0.50 percentage points to 2.79 per cent above base (currently 3.29 per cent). At 70 per cent loan to value, the rate has been reduced to 2.48 percentage points above base from 2.59 per cent. Offset trackers in the loyalty range have also been cut with the lowest rate now 2.28 percentage points above base, down from 2.39 per cent at 70 per cent loan to value. At 75 per cent loan to value, the rate is now 2.59 per cent above base, down from 2.99 per cent and is the lowest rate ever offered on this product.
Homeowners with savings of £20,000 who switch to the new rate of 2.48 per cent could save £47.36 a month or £14,208 over the loan term with a £150k repayment mortgage. If they also saved £50 a month, they could pay off their mortgage nearly three years earlier by offsetting.
Offset mortgages could also benefit a range of tax payers by helping to limit the impact of tax and inflation. A 20 per cent taxpayer would need to find an equivalent savings rate of above 3.10 per cent, a 40 per cent taxpayer will need 4.13 per cent in interest, and at 50 per cent tax would need to earn 4.96 per cent in interest to get the same savings as offsetting their mortgage (when compared with the 2.48 per cent Offset rate).
Source: Barclays
