the Power hour
borrower we have. But there is a break point on everyone’s mortgage where offsetting becomes more advantageous than not - maybe the offset calculator that lenders including Woolwich have on their websites should have that facility.
how PoPular has oFFset been in the Past? Fahim Antoniades: I don’t think it’s been as popular as it could have been. If we roll the clock back to first days of offset the difference in rate between an offset and typical mortgage was quite large. The problem is that when you’re dealing with an economy and population that is heavily reliant on debt you’re catering for people who are rate-hunting all the time. Brokers would have looked at the effective rate you were getting, even after the tax-free element of the offset account, and three years ago would have found that a regular 2-year deal was still cheaper than an offset. Offset gave itself a false start on that basis and I don’t think took off as well as it might have because of that rate gap.
“THE MOMENT FOR OFFSET IN A WIDER MARKET IS NOW. PEOPLE ARE STRUGGLING TO GET A HALF DECENT RETURN ON THEIR SAVINGS AND THE MARGIN BETWEEN OFFSET AND MORE TRADITIONAL MORTGAGES HAS NARROWED.”
That’s now changed as the gap has narrowed but culturally we’re still a nation that’s heavily reliant on debt and very few people have the kind of capital you need to offset against a mortgage. I have suggested offset to clients but when we’ve gone through their income, expenditure and lifestyle we’ve come to
the realisation that they won’t save the amount of money they need to in order to make the offset work. While it’s a good idea, you might be overpaying for a product you’re unlikely to use. That’s the issue here. Now people are
more mindful about their finances and are trying to accumulate savings. It’s perhaps a better environment now to sell offset. Brokers should be doing more to peddle it out.
what should intermediaries think about when advising clients on oFFset? Simon Collins: Last year one in ten Charcol mortgages was offset. The main thing brokers should consider is that the offset bit of the mortgage is only part of the overall picture. Some brokers can focus on putting everything in the offset and forget that it is an avenue into a fuller financial view of the client’s circumstances. It’s very rare to find someone who wants to offset the full mortgage with their savings. There are
38 mortgage introducer APRIL 2011
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