New Mortgage Could Help Small Business Owners Clear Home Loans Early
More than one in five (22%) small business owners are striving to pay off their home loan early so they can grow their business quicker, according to research to support the launch of Clydesdale Bank's new Business Offset Mortgage.
The UK wide study of small business owners and sole traders with home loans found almost a fifth (19%) would have the confidence to take business risks if they were mortgage free. And over a quarter (26%) said being mortgage free in the future would encourage them to expand their business.
The research was conducted to support the benefits of Clydesdale Bank's Business Offset Mortgage. The Mortgage allows clients who own businesses (sole traders and simple partnerships) to offset their business deposits against their residential Clydesdale Bank Offset Mortgage, in addition to their personal credit balances. The amount of interest outstanding on the mortgage is offset by the amount of interest earned on their current and savings accounts, therefore reducing the amount owed on the mortgage and providing the client with the opportunity to be mortgage free years earlier.
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 tend to be very financially astute and 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."
Of those businesses surveyed the average outstanding home loan balance was £102,056 with combined credit balances of £31,708. Based on these figures, if the average small business owner swapped their home loan to Clydesdale Bank's Business Offset Mortgage they could save as much as £71,359 and pay off the mortgage eight years and eight months early.
According to Clydesdale Bank's calculations if all sole traders and small business owners in the UK with a residential mortgage were to switch its Business Offset Mortgage, they could cumulatively save over £178.5billion.
Clydesdale Bank's research also found that if small business owners paid off their home mortgage early, more than one in ten (11%) would use the extra money to hire additional staff so they could take some time off and nearly a quarter (23%) said they would use some of the freed-up cash to help their children get onto the property ladder.
Fred Sharp said: "This research underlines that the financial goals and aspirations of UK business owners are still not being fully achieved. Our Business Offset Mortgage can help brokers make business owners' money work harder for them.
Clydesdale Bank's Business Offset Mortgage has competitive rates of interest. The overall cost for comparison is 6.7% APR.
Further information on the Business Offset Mortgage, please contact your local relationship manager or phone the Intermediary Support Team on 0800 678 3066