offset vs standard rate

redhandbag57

Help please!
I am coming to the end of a fixed rate mortgage- I have £15500 left to pay and about £10000 in savings. I save about £250 a month and would like to have £6000 in savings and a fully paid off mortgage by Sept 2010. (DD off to uni then!)
I had planned to use about 7500 of my savings to reduce my mortgage to 8k then pay this off on the standard rate-presently 7.19% at my bank so as to avoid arrangement fees for a fixed rate morgage.

However I went into the bank and they offered me an offset mortgage as the answer - it has a £1799 fee and a lower mortgage rate- I would have to borrow 32K then straightaway pay off 15k and transfer all my savings to the bank- I walked out before signing on any dotted lines!
Am I correct in thinking I am better doing it the way I originally planned?

getmore4less

That fee is too high for what you have left

other lenders have much better offset deals allthough it looks like the best one that FD were doing is no longer available.

Setting up an offset may be a good longer term plan if you have expences like uni support for kids yo help with cash flow.

Interest rate is not that much of an issue when you have only £5.5k net debt all the other costs are much more significant.

redhandbag57

I thought the fees seemed high for such a small amount - thanks