Anyone got a FIRST DIRECT Offset Base Rate Tracker mortgage?

midflight

Hiya folks,

With Halifax at moment, been fixed at 5.85% for past few years.

Need to remortgage by end of December. Only just over £30,000 left, house worth (taking into account recent falls) around £110,000 (approx 27% LTV?). Will probably take it out for minimum term (5 years?)

Currently looking for the best Offset Tracker out there. Woolwich caught my eye at first, but First Direct's looks juicier!? Better rate, and no fees! Too good to be true? Any thoughts?

Which accounts can you link to your offset mortgage? Is it just your current account and your basic savings account? How about ISA? I think on Woolwich you can do that...

Any other providers I should consider?

Many thanks in advance, x

:beer:

Locoblade

You can't link ISAs to FD's offset mortgages, but then at the moment the interest rate is low enough that you'll earn more on an ISA if you keep it as an ISA rather than as an offset anyway.

Its not too good to be true though no, just very competitive. I think you'll find you may need to mortgage for more than £30k though, but that isnt really an issue, just remortgage for their minimum (£35k?) and then offset the spare £5k. They are very busy at the moment though, so I'd get things moving with them ASAP if you want to complete by the end of December

lisyloo

First direct are fab.

You cannot offset ISA, but you may not wish to do that anyway.
My mortgage rate will be 4.99% and my ISA rate 7.32% so why would you want to offset?
I guess it's easier but you can often get a better rate by not offsetting.

There aren't really any other comparable offset lenders.
But you might like to look at HSBC for good deals.

Mrs_Chicken

Yep, I've got the FD fee free tracker, it's great - especially since the interest rate dropped!

You can offset individual and joint accounts, both current and saving. Only possible negative I can think of is that you have to be happy managing everything online and/or by phone - not a problem for anyone who can manage to use an internet discussion forum, I suppose!

PS Why would you want to offset ISAs against a small mortgage? I'm speculating but you might only have 5 yrs left to go on your mortgage, and 30yrs to live - 30yrs in which your ISAs could carry on earning interest in their lovely tax-free wrapper, as Martin would say.

Locoblade

Mrs_Chicken wrote: »

PS Why would you want to offset ISAs against a small mortgage? I'm speculating but you might only have 5 yrs left to go on your mortgage, and 30yrs to live - 30yrs in which your ISAs could carry on earning interest in their lovely tax-free wrapper, as Martin would say.

I believe some offset mortgages (Woolwich I think?) allow you to keep your ISA in that "wrapper" whilst its offsetting the mortgage, so when you finish the mortgage the ISA status can be retained and earn tax free interest again.

As mentioned above though, probably not a bit issue at the moment if considering an FD tracker as the mortgage rate is significantly lower than top ISA rates.

lisyloo

I'm speculating but you might only have 5 yrs left to go on your mortgage, and 30yrs to live

ISAs are certinaly better for this reason.
Mortgage savings are tax free for TERM.
ISAs are tax free for LIFE.

Howeveer I can't see any reason to offset at the moment with rates the way they are.
The only reason would be if you really couldn't be bothered to chase higher rates but I'd be £700 per year worse off doing that, so I'm prepared to spend 2 hours a year doing a switch.

I often find it useful to value my time that way.

midflight

Thanks for all your replies so far.

I should explain... my goal is to pay the mortgage off as quickly as possible, and therefore I intend to throw everything at it (including my 2 year's worth of ISA savings). Then once it's paid off I can concentrate on building up proper savings... (for the remaining 64 years of my life)

I figured the best way to do this would be to take £30,000 (the minimum allowed, and coincidentaly how much I actually owe) over 5 years (the minimum term)... and then overpay (offset) it like crazy. If all goes to plan, I'm looking at 1-2 years max. Obviously I don't want to pay any kind of fees (arrangement, overpayment, redemption, exit, legal, etc) and the First Direct option seemed good for this.

Would appreciate any further input

lisyloo

my goal is to pay the mortgage off as quickly as possible, and therefore I intend to throw everything at it

Well I don't know your tax status and I completely understand the psychology, BUT this is not the best way to make use of tax breaks.

You are ignoring ISA breaks (which are irreplaceable once they are gone) and you are possibly ignoring tax benefits of pensions (although we don't know that and there are issues like illiquidity).

Personally I am paying my mortgage off over a longer period and buidling up ISA.
This is less psychologically satifying as my "debt free" date is further pushed our, but it makes a lot more financial sense tax wise.

So I'm letting my head rule my heart.
Are you doing the opposite??

dimbo61

Sounds like a good plan to me
but where are you going to save your money over the 62 years 7 months 15 days and 9 hours 7 minutes of your life !
Cash ISA,s are still a good idea for long term savings and building up an emergency fund just in case.
Paying off £30k in 2 years is great but this will give you a lot of spare cash to invest after the mortgage is paid.
Think long term and GOOD LUCK

Locoblade

As others have alluded to, it would be a good idea to leave your ISAs intact as long as they're in accounts earning more than 5.29% (the current rate for the fee free tracker), at least for now.

If you want to use them to actually pay off the mortgage, only consider withdrawing them and putting them directly against the mortgage if/when the ISA rate drops below the mortgage rate, or when the ISA is worth the same amount as that remaining on the loan, that way you earn as much interest from them for as long as possible (in the ISA)

little_miss_messiah

I'm no expert on the ins and outs of it, but I've had an FD offset for 3 yrs now and love it, the ability to just shove an extra £50 or £100 over here and there (or once the interest is taken to take it to a 'round figure' so it's all nice and neat).

I have banked with FD for over 10 years now and would never bank elsewhere, their customer service is second to none and the people are fantastic.

I always keep my cash ISA fully subscribed at the best rate possible tho and this is seperate