Scottish Widows Offset Mortgage for a new customer

Michael_Bear

Hello,
I've been on Scottish Widows website and have found an offset mortgage for 5 years at 1.48% with no booking fee. I'm sure this is available for new customers but I think I have to go through a mortgage advisor to get the rate as a new customer, does anyone know who would offer this deal and would there be further costs (such as mortgage advisors fee ect)?
To be honest if the deal is reward loyalty of existing customers only I commend them for that and understand if I cant get it. Also the deal looks to good to be true to be honest (basically a decent market rate with no fees and offset ability, seems odd!).
Anyway any advise or suggestions on offset appreciated. I also appreciate it if I'm being delusional thinking getting a rate for an offset mortgage at normal market rates is asking too much.

Offset mortgage: Reason why this would be preferable is due to my massive risk adverseness and anxiety I value the opportunity for liquidity so would prefer this to just paying more of my mortgage off.
My circumstances nothing non-standard to note (55% LTV, no debt, standard build, mortgage 3x joint income ect)

Thanks in advance for any replies. Your expertise and time is appreciated!

getmore4less

That looks like a product transfer rate(1.25% with £749 fee)
on line and the data sheet(1st Feb) linked  have different rates
 
Remortgage 5y rate is 1.61% £999 fee

K_S

@michael_bear Purchase/remo? I don't see the rate you've mentioned tbh - 60% LTV, 5 year fix, 1.48%, no fee. Could you share the link?

To answer the rest of your questions -

- It is indeed a good product though you do pay a small interest rate premium for the offset. Most of my clients who use this are people with spiky income and those who would use it like a cheap line of credit for business purposes.

- Any whole of market broker tha you use should have access to SW products

- Some charge a broker fee and some don't. There is no difference to the SW rate you will get. If you only want to use a fee-free broker, there are plenty of recommendations on the MSE page here

Michael_Bear

The link i used is - Scottish Widows Bank | Mortgages | Offset | Offset calculator - Flexible mortgage with offset, PV:350K, Loan:190k, Repayment. Then its the 6th option down, the one one @getmore4less refers too is top one which is equally as good when you factor the fee/my savings.

@K_S Re-mortgage from Santander.

Cheers for the rest of information both! If it's 1.61% with £999 that makes it less attractive and I'd have to get a spreadsheet out to work it if it'll be more beneficial. (Santander are offering for normal non-offset mortgage to me 1.59%/£0fee or 1.39%/£999 fee)

K_S

@michael_bear For a 5-year 60% LTV remo, you're looking at 1.61% with a £999 fee with SW offset.

As you would expect, there's always going to be a premium to pay for the feature   To be honest, I'm quite surprised the premium is as low as 0.22%. Very competitive considering the next comparable offset step is at 1.85% upwards.

Michael_Bear

@K_S cheers for all the information.

getmore4less

I cheat and use the intermediary sites to get extra info they try to hide from the retail site.

SW do feel a bit pricey for the new business and purchase but competitive with existing

on that 5y 1.25% £749 fee  against 1.48% the break even amounts are 

term	mortgage size needed
	0.24%
5	£123,947.72
10	£83,707.87
15	£75,515.02
20	£71,993.64
25	£70,037.65
30	£68,795.04
IO	£64,420.00

on £190k mortgage you would need to be offset over £100k-£125k depending on planned payment to be considering the no fee option.

Michael_Bear

@getmore4less shame I can't get the existing customer stuff (but bravo on then for rewarding loyalty). Thanks for calcs that means if I were an existing customer 1.29% with fee would have been better.

Looking at 1.61% rate vs 1.39% (both same fee and term) if I assume a saving rate of 0.5% and my current savings the offset wins. Obviously any calcs need to assume the amount saving one has and the interest rate I can get on saving part in non offset option. So an offset mortgage (as they'll be a premium) is always a judgement call.

(Im aware other rates but just comparing Santander to SW)

getmore4less

If you can get 0.5% for your savings then the 1.39% rate wins unless 22%+ offset.
(I think that is right now)

Michael_Bear

@getmore4less cheers for doing all the cals for me. Do you think it's fair to say 0.5% saving rate or do you think they could go up (or is 0.5 too optimistic with dropping rates)?
I'd be offsetting 30-35% and due to stoozing maybe 35-40% (I used to cc stooze but for small returns I'm not currently doing so) if this info helps with anymore of your amazing analysis.

getmore4less

Some say 0.5% is generous for savings with the similar flexibility.

There are 5 year rates over 1% but that removes the flexibility  completely

My view with offsetting is it sits there till you find something better,  back in the stoozing days where £50k was not uncommon from 0% CC and long term savings were not an option in case no new 0% came along
Also there were great lifetime tracker rates offsets with low margin made them an easy choice.

If I was doing it now not sure I would go down that route.
Variable income  and investing  offset can be good for cashflow into ISA for example.