OFFSETS - THE BASIC

all4one

Ok understand them in principle, but where/what sites can I do comparisions ?

I already have a mortgage for 30,000 and savings of 30,000 and plan take out another mortgage of 60,000 (90,000) in total...

I want to pay off mortgage quickly while still having money in the bank - can someone confirm this is the way to go or are there any other options i should consider ? (I'm not adverse to a flutter on the markets...)

MarkyMarkD

Have you considered the probably cheaper option of borrowing £120k on a flexible mortgage, then repaying the £30k the day after completion?

This would leave the £30k available for drawdown - as good as cash in the bank, or nearly - whilst you would only pay interest on the £90k actually outstanding.

Offset is only worthwhile if the amount offset varies frequently, and is also large, IMHO.

Flexible mortgages are available at better rates than offset mortgages.

Rafter

Never found a good comparison site.

I think because few of the providers pay commission, few of the comparison sites are interesting in listing them, since there is no kickback for them.

Suggest you compare:

If.com
firstdirect smart mortgage
the one account
Barclays/Woolwich OpenPlan

I know it would be possible for me to beat the rate on my offset mortgage through some flexible arrangement as suggested above, but I like keeping my savings separate and knowing that my fluctuating current account balance is also keeping the interest down on my mortgage.

There are also tax benefits, since you are not paying tax on your savings and mortgage interest tax relief was removed years ago.

As far as 'having a flutter' with some of your savings, you need to make an after tax return greater than your mortgage rate to make this worthwhile.

I do have some index tracking ISAs and PEPs which I hope over the longer term will offer a better return than the mortgage rate.

Hope that helps.

R.

payless

I think because few of the providers pay commission,  few of the comparison sites are interesting in listing them,  since there is no kickback for them.

Not sure I agree -  offset mtg  commissions are usually higher than normal commissions, so perhaps another reason for them not to show

Those may be the most common offsets - but not always the "cheapest"  these days

all4one

Thanks for all the info...I like Rafter like the Offset approach of seeing the money/mortgage in one account, although it may not be the cheapest - I think it would motivate me more to pay off the mortgage.

So I gather its better to trawl the websites to see who is offering the best offers/deal rather than use a broker ?

payless

As Martin's says brokers can help- and many don't charge ( may come up with deals you were not aware of/ or exclusives) but still take a look around yourself so you can talk on a "informed basis"

Hobo_2

Payless is right, take "the one account" for instance if you apply through say charcol online or say money supermarket you can get reduced intro rate periods etc but not if you apply direct