Offset Mortgage

stechr

I was missold a 1 year fixed deal with Barclays which turned out to have a further 2 year tie in which I had intended to convert to an offset after the 1 yr fixed term. To cut a long story short Barclays/Woolwich have agreed to pay me what I have lost and put me in the same posiition I would have been in with the offset had it been able to start in 2007 but have insisted I take out the offset product. I have a current mortgage balance of approx £150,000 together with saving of £152,000 which will go into the offset. Does this mean I have no payment to make each month as I have in effect covered the mortgage? If I was not having to have the offset I was planning to pay off the mortgage in full but Barclays/Woolwich are insisting they put me on the offset.
Much appreciate any advice on this

getmore4less

Barclays do not pay interest on excess funds in the offset accounts.


With 100% offset you can set it up so there are no payments and/or paymnets come from the offset funds.

Make the mortgage payment DD from the linked current account and set to "reduce payment" not "reduce trerm".

Handy having access to the funds should you need them and costs nothing once set up.

I would keep the mortgage going.

If you pay off most of the mortgage you get a mortgage reserve with the similar amount of credit so you do not have saving for any means tested stuff should you need it(guessing you don't).


If you can get them to agree that there would have been offset funds from the beginning that could save you some money.

GGGG

OP-Can I just point out that Offset mortgages are designed primarily to reduce the amount of INTEREST you pay back to the lender, thereby reducing either the term or monthly payments;- you will always have to pay back the capital, so yes, unless you intend to use your capital to redeem the mortgage, you will have to make payments.

stechr

Barclays/Woolwich are insisting i go onto the offset and are paying my loss for not having one from 2007 to put me back in the same position I would have been. When I was going to go on the offset in 2007 I would not have as much in savings as I now have so wouldnt be totally covering the mortgage. If I have to make payments each month, even though the full mortgage is covered by the savings, do I move the balance in excess of the mortgage each month to a saving account? (the day after my monthly payment is made?)
thanks for your help

getmore4less

Set the DD payment up from the linked offset current account.

If 100% offset there is nothing more to do it just stays at 100%

stechr

Thanks for all the advice.
I have now received the compensation from Barclays which they have applied to my mortgage account. They have also agreed to not force me on to the offset product which is good news as I have a tracker at base + 0.49% until September 2009. I am thinking the best route would be to invest my saving until September when I will pay off most of the mortgage, leaving a small amount of ?? so as to leave the deads with the bank rather than paying to have them stored at a solicitors.
Does this sound like a plan ?
In case this has a bearing my mortgage account is approx 50% repayment & 50% interest only.
Thanks in advance.