advise-one account/offset???

cliffordandnancy

hi there...looking for any advise you guys could give...

pretty new to the housing market, bought my first property last year with the Halifax and a bit of a late starter at 33!
The repayment term I was sold, was for 31 years!!! yikes!

Just received my annual mortgage statement, trying to make head of it all, but theres been a lot of buzz about this "one account" mortgage, and looking at the website seems a bit too good to be true....

I could be mortgage free in 12 years???

Basically I have an £80,000 repayment mortgage...
I earn £20,000pa
I have a personal loan of £4,000
Car finance of £4,000
I have £7,000 in personal savings

Along with the other usual household bills thats it really, do you think this "one account" is really as good as it sounds...as obviously cutting the length of my mortgage would be ideal.

I currently pay £534.00 a month to the mortgage, do you have to pay more per month to benefit, if so roughly how much more???

Any advise would be much appreciated...really am dazed & confused!!!

many thanks
nancy.

lisyloo

Firstly the only way you will be mortgage free in 12 years is by putting a lot of savings into to (which you don't appear to have) or making much larger overpayments.

The one account rate is quite high, so you'd be better off looking at an offset with someone like first direct, but really these types of mortgages benefit people with large savings, which you don't have.

So basically, no don't believe the hype.
You can pay off a 31 year mortgage in 12 years just by paying it off quicker.
Simply as that.
You don't neeed anything special except for a deal without penalties, however if your other debts are at a much higher rate then it might make sense to pay those off first.

cliffordandnancy

hey, thanks a lot for quick responce...

still a bit dazed & confused...???

do think that instead of offset type thingy, perhaps put £7000 in an ISA type savings?

its just that looking into being mortgage free by the time im 50 seems great compared to still being tied to the mortgage until im 65!!!

been looking at finances and probably could afford to pay at least £100 per month more toward the mortgage, would this be enough to help reduce the length of mortgage considering I dont have that much in savings?

Or am I kidding myself on & just keep on with the repayment style?

thanks again,
Nancy.

dimbo61

Overpaying your mortgage by £100 a month is a good start.
Once you have paid off your car loan using the money you paid out in repayments ( for the car loan ) to overpay by even more.
If you get a pay rise at work split the rise 1/2 on overpayments and 1/2 on living expenses.
Start saving by putting your £7000 in the best savings account you can find
or even use to clear the car loan early depending on the rate of interest your car loan costs.
Overpaying and saving £400/450 a month will clear your mortgage in 13 years if not sooner. GOOD LUCK

dimbo61

You have a loan and car finance of £4000 each and £7000 in savings !
Are you paying a higher rate of interest on your loans than you earn from your savings. !!!!
If you paid off either the loan or car loan you could use the repayments to overpay your mortgage ( may have overpayment limit IE 10% a year )
Put any extra into cash ISA,s

cliffordandnancy

hey guys
many thanks for your responses...it really does make sense
I suppose its one of these things you know, but your afraid to do!

anyhoo....brilliant, and thanks again for advise, im going to clear off the bank loan & set that money towards the mortgage along with another £100 per month & hopefully I'll get rid of this dreaded mortgage!!!

again thanks xx