Fixed rate vs Offset

noodles42

Hi there

I hope someone can help me a bit here.

I am currently in a fixed rate of 6.14% until July 2010 but by mortgage company has just said that if I want to take another 5 year fixed rate from now I can get 4.99% - it is quite a flexible mortgage allowing me to repay up to £499 additional each month and I can take payment holidays should I need to.

However I also have around £15000 in savings and putting £300 aside each month and I was wondering whether I would be better to let my current mortgage time out and then look at offsetting.

Current mortgage is £123000 roughly
Term remaining is 15 years

Thanks

Trying_to_be_good

A lot depends on what rate you're getting on your savings, and whether it's tax-free. Whether you're a higher rate or basic rate taxpayer.

Also, what's your LTV, as this will affect the rates you would pay on a new mortgage.

There are some good offsetting versus savings calculators around to help, try http://forums.moneysavingexpert.com/showthread.html?t=471.

unite79

Whose your lender, that sounds a generous offer!

dimbo61

You have not given your LTV or what you think it might be ?
What are the fees to take out the new 4.99% deal ?
Use " whatsthecost " to see how much you will save over the next 15 months !!!!!
Thats very kind of your lender to let you come out of a deal at 6.14% 15 months early ???
You could either reduce the mortgage with some of your savings or overpay by £499 a month ( check if you can borrow back ? )
Payment holidays are only allowed if you have lots of equity or have overpaid on the mortgage.
Your current mortgage payment is about £1047 a month? and would drop to £972 at 4.99%.
This is only my opinion and not advice but I would reduce my term by 1 year to 14 years the mortgage would then cost £1018 a month and overpay by £499 a month out of my savings and in 5 years time You would owe about £52,000 on your home.
Just something to consider GOOD LUCK
Ps I am in the middle of a 5 year fix sub5%

noodles42

Hi guys

Thanks for this.

LTV is roughly 67%.

Regularly overpaying by about £400 a month so would be looking at reducing the term to either 12 years (hopefully maybe even 10 years)

Britannia have also said that there will be no additional charges for set up of the new mortgage etc.