Coventry BS paying SVR on offset balance

Tiger1971#

I have a question about Coventry BS (CBS) mortgages I'm hoping someone can help me with.
I'm interested in their 5 (at 2.15%) and 10 (at 2.59%) year fixed offset products. While discussing this with one of their mortgage advisers I was told that opting for the 5 year deal and then going onto their SVR with an offset at the end of the 5 year term (let's assume its 4.74% for CBS if they add the recent 0.25% base rate rise) would benefit me to the tune of approximately £116 / month if I had £100K in the offset and we assumed the balance owing was £160K. This is based on being told that CBS would be paying me the SVR of 4.74% on the £100K offset money while charging me 4.74% on the net £60K mortgage balance - all of this being in comparison to being on the 10 year fixed offset at 2.59%. Is anyone aware of this principle of paying interest on the offset figure once on the SVR? Is it real?!

silvercar

The way an offset works is that you don't pay any interest on the amount that is in your offset savings account. So if you had £100k offset, you would only pay interest on the £60k. But this applies whatever the interest rate is. So if you went for the 10 year rate, you would only be paying interest on the 60k at 2.59%.

Tiger1971#

Thanks Silvercar - that was my understanding too. I got the bizarre explanation from the Coventry BS mortgage Adviser not once but twice. His name was Richard and he claimed to have previously worked for Barclays. He said that Coventry BS did things differently. Ha! I've now spoken to another mortgage adviser at the Coventry BS and been given the version that you describe - which is what I expected. This messing about caused a couple of days delay in choosing the product we wanted. I hope we can get our application in in time before they raise their rates!