First Direct Offset Mortgages - Warning

adrewetx

Hi All,

My first post, but couldn't see this covered else where. I'm with First Direct and have been for several years. I signed up for their Offset mortgage, and more recently opened up joint accounts with FD also.

My assumption was that - if you have an offset mortgage - then ALL your current and saving accounts including joint accounts paying the mortgage, would ALL help offset that mortgage. (Obviuously excluding e-saver accounts)

Heard today, that no, you need to call First Direct and instruct them to link accounts for the purpose of offsetting. Ie. not all accounts by default are set to offset. Maybe I've worked my sums wrong, but I beleive that I've incurred around £500 in mortgage interest charges over the past 3-4 years, that I would have saved had ALL my accounts been automatically connected to my First Direct account.

Anyone else experienced this?

Adrian

Locoblade

Its good to point it out, but surely if the account isn't linked then it would have been earning interest independently (even a current account should earn small interest), and if you see interest payments coming into that account, that should give you a clear indication it wasn't linked to the offset Id think?

If your joint account has been earning interest independently then obviously you can subtract that from your calculated losses, so probably not as bad as you think anyway.

adrewetx

Agreed I should of kept an eye out for the warning signs; ie. interest payments.

But I signed up for standard saving accounts assuming it would be offset. The interest on standard accounts (roughly 3%) doesn't compensate for the 6% interest I could save on the mortgage.

And there's no interest payable on Joint/Sole current accounts; so with my salary going into the Joint account, it didn't receive any interest.

vwchris

I've recently gone through the application process - on one of the forms it asks you for the details of the accounts you want to link to the mortgage.

ixwood

I noticed this recently, but it was a new account with not much in, so didn't really miss out.

If you click the "Offset Mortgage Summary" link at the bottom of the mortgage page it shows what accounts are linked. If you get a new one you have to ask them to offset it.

The summary page also how much you've saved from offsetting and you can also see the next interest payment amount in "charges"

TighterThanTwoCoatsOfPain

Its only recently (ish) that they stopped paying interest on current accounts. Dont know how long it was since you got your offset, but on my recent application form there was a section in it which specifically stated that i had to advise which accounts i wanted offsetting and that none were automatic.

I'd agree that on opening your account it might have been nice of they had asked you if you wanted it offsetting, assuming you didnt DIY it on the internet.


edit - already been said, opened page earlier but forget to refresh before replying!