Thousands of Barclays mortgage customers are to lose a special perk allowing them to automatically extend a current account overdraft at rock-bottom rates of interest. Woolwich, the bank’s mortgage arm, is scrapping the offer for customers who had special current accounts sold alongside its mortgages. Borrowers eligible for these types of accounts are able to apply for an overdraft of up to £20,000 at a low 4.49 per cent plus Bank of England base rate of 0.5 per cent when they take out a mortgage. As a special part of the deal, as you gradually pay off your home loan so Barclays automatically increases this overdraft limit by the same amount.
So if you paid £10,000 off your home loan, a £20,000 overdraft would extend to £30,000. This is known as a ‘rebalancing’ facility. The idea was that borrowers would use the cash to spend on things which are too expensive to be funded from a bank account, such as home improvements. A spokesman says the bank is removing the ‘rebalancing’ feature from its mortgage current accounts because not many customers are drawing down on it......Read more here