Citigroup said Wednesday it is offering a new mortgage with faster, lower payment options that will let home borrowers pay off mortgages a bit earlier and pay less in interest.
The Offset Mortgage allows borrowers to link their mortgages to their savings account and use these balances to potentially reduce interest amounts and payment months.
“This new program is unique in that it helps our customers optimize their financial portfolio, better manage their debt and allows their money to work harder while maintaining complete flexibility,” said Sanjiv Das, president and chief executive officer of CitiMortgage.
“It gives customers a great way to use their savings account to pay their mortgages faster,” he added in a telephone interview with Lohud.com. ”When people buy a house they take on a huge debt. “
The new loan offering comes just as the spring house buying season takes off. Early reports on first quarter sales from real estate companies show a rise in bidding wars and an increase of buyers who want to upgrade their homes. Factors prompting the vibrant real estate season are the improving economy, low interest rates and pent-up demand.
But the high cost of houses remains a major factor for those seeking a new suburban home.
Citigroup’s program is similar to offset mortgages offered in Australia, which Das worked on and was launched in a pilot program at 19 Citibank branches last year.
Stephen Troutner, Citi’s head of Branch Network and Banking Products for U.S. Consumer Banking, said “the Offset Mortgage is a perfect example of how we are helping customers manage their finances by leveraging a broader relationship with Citibank.”
Here is an example of how it works, according to the bank’s information:
“A participating customer with a loan amount of $500,000 at a 3.75 percent interest rate and a deposit account with a $50,000 balance will initially receive a month “offset reward” of nearly $160. This allows them to pay off their mortgage approximately two years faster, and saves over $32,000 in interest over the term of their mortgage.”
Citibank has 24 branches in Westchester and two in Rockland County. It has approximately 200 million customer accounts and does business in more than 160 counties and jurisdictions.