‘Mortgage-free dreams’ of small businesses

As part of the Clydesdale offer, clients are able to offset their business deposits against their Clydesdale Bank residential offset mortgage, in addition to their personal credit balances.

Because of the structure of the mortgage, the amount of interest outstanding is offset by the amount of interest earned on their current and savings account, allowing the client to be ‘mortgage free’ in a faster timeframe as the amount owed on the loan reduced.

Fred Sharp, Clydesdale Bank’s head of intermediary business, said: “Offset mortgages are becoming increasingly popular with brokers for clients who are wanting to pay off their loan as quickly as possible.

"We are one of the few providers to have extended the benefits of offsetting to small business owners and sole traders. People running their own businesses are quick to recognise a good deal that will save them money, which is why brokers should find this product has a particular appeal.

“The business offset mortgage helps brokers to meet their client’s needs, by offering the convenience of having their personal and business banking requirements met all at the same place.”

The research by the bank also suggested that 26 per cent of small business owners would expand their organisation if they were free from mortgage commitments, while 19 per cent would take risks if they were ‘mortgage free.’

However, Hugh Nichols, partner at Badbury Berkeley Financial Services, said: “Unless the rate is very competitive I would be loathe recommending this deal. Offset has never really taken off in this country and the borrower is tied in.”

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