Butterfield Bank is to offer Australian-style mortgages for Guernsey residents, who are being target...
Butterfield Bank is to offer Australian-style mortgages for Guernsey residents, who are being targeted with an offset mortgage that includes internet banking.
The Butterfield Current Account Mortgage builds on a concept originally developed in Australia under which borrowers only pay interest on their mortgage balance minus whatever is in their current account.
If a borrower had a mortgage of £400,000 and savings of £20,000 in their current account, the borrower would only pay interest on £380,000.
By doing this, borrowers can reduce the interest paid, as well as the term of their mortgage, according to Butterfield. The company's figures suggest if a borrower had an annual gross income of £100,000 and a bonus of £10,000 with monthly expenses running at £4,400, on a mortgage of £400,000 at their present rate of 5.875% pa, potential interest savings are £120,000, reducing the term of the mortgage by some seven years on a 25-year product.
Along with being able to make additional payments, the mortgage allows borrowers to draw down funds from their mortgage account up to a pre-agreed limit.
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