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The new Buy to Let Offset mortgage has been designed by the Family Building Society to help reduce the impact of Section 24 tax changes for private residential landlords.
Any money held a linked savings account with the Society will reduce the balance for which loan interest is calculated on the mortgage by the same amount. Thus reducing your interest payments that may not be fully utilised to offset your tax exposure post section 24 mortgage interest relief reductions.
The product is a 2 year discounted rate at 2.99% with a £999 fee and maximum 65% Loan to Value reverting to the Society’s standard variable rate of 5.29%.
Customers can chose between reduced monthly mortgage payments or term reduction. If the reduced payment option is taken, interest saved every month will be used to reduce the amount of the borrower’s next month’s mortgage payment, so the more that is offset, the lower the monthly payment will be. This is available both on interest only and capital and interest repayment mortgage types.
The other option will reduce the term not the outgoing payment. However as the balance decreases then the interest charged will decrease and hence help mitigate the effects of Section 24 again with a lower Loan to Value.
Keith Barber,Director of business development for the Family Building Society said, “Offsetting savings against your mortgage reduces the amount of interest charged. The effect of this, other aspects being unchanged, is to increase the profit from letting and increase the landlord’s overall net cash flow.
“With changes to the tax treatment of mortgage interest starting this week, making best use of your resources has never been more important for landlords. This may be particularly important for retired investors relying on letting as part of their retirement income, for example.
“It’s also an ideal way for landlords to benefit from the regular sums they put aside for maintenance and improvements, or the tax to be paid on their letting income. Something to be welcomed in this historically low interest period.”
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