Top left to bottom right: Mike Fitzgerald, director, Brentchase Financial; Jonathan Cornell, head of communications, First Action Finance; Sally Laker, managing director, Next Intelligence; Andrew Montlake, communications director, Coreco; David Finlay, intermediary business director, Barclays; James Prosser, show director, Mortgage Business Expo; Simon Collins, product technical manager, John Charcol; Christine Newell, partnership manager, Paradigm Mortgage Services; Fahim Antoniades, director, Mortgage Centre IFA; Robert Sinclair, director, Association of Mortgage Intermediaries; David Hollingworth, head of communications, London & Country.
among people looking for a straightforward mortgage or where affordability is a bit tight. People with big tax bills to pay also keep the balance in their offset account for a year to get the most out of it.
oFten oFFset is seen as a high net worth Product. should that be the case? Andrew Montlake: City bankers like the offset product and the ability to use their bonus in a lump sum against the mortgage without losing access to the cash if they need it. That flexibility is key. Jonathan Cornell: Offset is not a vanilla product for someone who wants the cheapest 2-year tracker or 2-year fixed, isn’t looking to make overpayments or draw the money back. It’s priced at a premium for people who want that flexibility. One big advantage offset has over say a flexible mortgage is in the situation that a lender offering flexible deals has to change some of its terms and conditions. There are an awful lot of
people in the past who’ve found themselves in the position where they’ve overpaid, expecting to be able to draw money back and are now disappointed. Sally Laker: I’m an offset user and always have been. It’s a fantastic tool that gives you access to your money to do with what you wish. But I think when the credit crunch kicked in there was a lot of bad publicity about offset with worries about being able to draw savings back. I remember there being talk about offset borrowers who were with a lender that might be going down or might get swallowed in a merger, that savings would simply be attached to the mortgage and you’d no longer have access to that cash. That isn’t the case but the result has been an unsettling of offset.
what are the advantages oF oFFset? David Hollingworth: We’ve discussed high net worth borrowers and self- employed but actually I think the
moment for offset in a wider market is now. People are struggling to get a half decent return on their savings. The margin between offset and more traditional mortgages has also narrowed considerably to the point where there will be some offset borrowers who have taken the deal because it was a good rate – not because of its offset functionality. Getting that message out the wider public is definitely part of the process. Especially communicating the rate of return currently available on savings – even offsetting relatively small proportions of their savings will be more effective for them than sticking it in a poor-paying deposit account. DF: I came across a broker in Edinburgh advising clients to pay everything on their credit card, pay that off in full every month so there was no interest paid against that balance and leave their salary in the offset savings account to get maximum use out of that during the month. That’s quite clever though I’m not sure that would be suitable to every
mortgage introducer APRIL 2011 37
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