Can someone comment on my logic?

freda

We are currently with FD on their BoE base rate i/o offset mortgage, which is till Dec 08.

Given the current climate, I was thinking of reserving a mortgage now, just in case, to take over in Dec.

Details are: mortgage 154k on house value 300k. We will have 6k in savings by Dec in ICICI earming more interest (I'm a non tax payer) than we are paying on the mortgage, so will keep them there if no other reason to move them. I've basically been paying as if it is a repayment mortgage, but putting the extra into ICICI.

We can afford a few % rise in interest rates, any large interest rate rises and we could still easily afford the i/o part of the mortgage, I'd just stop overpaying.

So I am thinking that the best variable rate I can find out there is the FD +0.79% offset i/o mortgage with no fees, or the +0.49% one with £999 fees.

We'd have to be with the +0.49 one for 4 years to make the £999 worth paying.

Are there any others I could consider that are comparable? Is my logic sound?

TIA

getmore4less

We'd have to be with the +0.49 one for 4 years to make the £999 worth paying.

interest only on £154k at 5.79% is £743pm
interest only on £155k at 5.49% is £709pm

pay £743 on the lower rate and your capital owing goes below £154k in Jan 2011

Break even is 2y 4m not 4 years.