The package also includes an automatic pound;50 overdraft and free overdraft facilities of up to pound;2,000 for fifth-year students (three of the other major banks also offer the same limits). A savings account will pay 5.25 per cent in interest.
The package is intended to provide students with "savings and transactional" facilities, a spokeswoman said. Research carried out for the bank has found that many students have the means and are wiling to save.
The new mortgage will support close relatives or parents to buy property for student offspring, provided they contribute 20 per cent to the cost of the mortgage.
The Bank of Scotland promotes itself as "the Scottish market leader" in student banking. Neil Blake, director of savings and money transmission, said: "Our policy of providing a good deal for students has proved more successful than offering free gifts and short-term incentives."
The Royal Bank of Scotland also offers mortgages, and like the Bank of Scotland, offers special rates for student insurance.