Intelligent Finance Off Setting Mortgage

fortgrange

Hi

For the last 8 months I have been paying interest only on my mortgage. I am now in a position where I can revert back to repayment.

I have 204 payments left :eek: and to cover the capital in that time I would have to save an additional £1020 approx per month, this assumes no interest is being earned or off-setting taking place. So my question is, would I be better off,

a) Just returning to a repayment mortgage

b) Putting the £1020 per month into my off-setting account

c) Putting the £1020 per month into another savings account

I'm no mortgage or number crunching expert and realise that more detailed information may be required. I should also add that I am self employed and put my tax money into the off-setting account so would be receiving some off-setting benefits, even on a repayment mortgage.

Thanks for any advise

deedee71

Have you received a letter from If saying when your current mortgage product ends (assuming you have one), you will need to move to a new providers as IF no longer do mortgages?

I just got the letter and am worrying about it already even though it won't happen till 2011

sheslookinhot

deedee71 wrote: »

Have you received a letter from If saying when your current mortgage product ends (assuming you have one), you will need to move to a new providers as IF no longer do mortgages?

I just got the letter and am worrying about it already even though it won't happen till 2011

I thought it was just Offset Mortgages that IF were stopping.

fortgrange

I got the letter that said if I moved I couldn't take my off-setting mortgage with me but my current one will run unchanged until I finish paying it.

Does that mean they are quite a good mortgage to have?

opinions4u

fortgrange wrote: »

a) Just returning to a repayment mortgage

This is the best way to do it if you don't want to worry about managing your offset or savings account closely. What is the rate on your mortgage at the moment?

I believe their SVR tracks at 2% above BofE rate, which is good news as it's relatively low and flexible.

b) Putting the £1020 per month into my off-setting account

Financially this is what I'd do (unless I could get a higer return elsewhere), as it has exactly the same impact on interest charges as increasing the payments but also gives me the option to withdraw the funds for other projects at a later date.

Reasons NOT to do this are that the funds could easily get mixed up with other money in your offset or you may be tempted to spend it on other projects that aren't best use of your cash.

How disciplined are you?

c) Putting the £1020 per month into another savings account

If you can get a net rate higher than your mortgage/offset rate then this is an option. If it's mighty close or you're a higher rate taxpayer then I wouldn't bother.

I got the letter that said if I moved I couldn't take my off-setting mortgage with me but my current one will run unchanged until I finish paying it.

Does that mean they are quite a good mortgage to have?

In itself that message tells you nothing. But a lot of IF mortgages are flexible and low rate in the current envirnment. If yours is one of these then the answer is yes.

deedee71 wrote: »

Have you received a letter from If saying when your current mortgage product ends (assuming you have one), you will need to move to a new providers as IF no longer do mortgages?

I just got the letter and am worrying about it already even though it won't happen till 2011

What are you worrying about? Your mortgage product will end and you will go on to their standard variable rate (currently a low 2.5%) for the remainder of the term. You will not need to move providers unless you move house or want a product different to their SVR.

sheslookinhot wrote: »

I thought it was just Offset Mortgages that IF were stopping.

Their offsetting continues for existing mortgage agreements. They have stopped all new lending (with the exception of portable mortgages applied for before April 2010).

fortgrange

Thanks opinions4u for your detailed response and you are correct with the interest rate figures, so its relatively cheap at the moment.

My sensible side knows I should just revert back to repayment and be done. But the devil in me thinks far more fun could be had along the way with an excessable growing lump sum behind me!! As you say I have to be disiplined with my saving and not squander it!!

Ultimately I need to have the money to pay off my capital in 17 years, even more so as my pension fund has nose dived in the last 18 months ( I know so has everyone's) Just trying to explore the options of having a bit of fun along the way.

deedee71

sheslookinhot wrote: »

I thought it was just Offset Mortgages that IF were stopping.

It's all mortgages....their website doesn't even have a mortgage section anymore