Can I get a second mortgage, put it in my savings account and use it to offset?

Spezzo

Hi,

I had this idea the other day and would like to find out if there is anything which will stop me from doing this please.

I have an offset fixed rate mortgage fixed until 2018 at 5.69%
I have a large amount offset against this mortgage.

Lets say I have a mortgage of £150k and have £100k in savings.
What I want to do is get a second mortgage for £50k. I would then use this £50k and offset it against my 1st mortgage bringing the overall balance to nil and therefore no interest payable. I will then have to pay the interest on my second mortgage (I will be going for an interest only mortgage with zero fees for early redemption) which should be at a lower rate than 5.69% (my existing mortage rate) therefore saving me money.

To sum up can I get a second mortgage, put it in my savings account and have it offset my first mortgage?

Many Thanks

Mike

dwsjarcmcd

Only if it from the same lender, not another lender. Effectively you would be applying for an additional loan. Lenders want a first charge over the property and if you go to another lender, they would not get a first charge.

Charterhouse

Funnily enough, no, you can't do this, as yes it would have to be the same lender and they MAY allow you to take out additional borrowing depending on the value of your house and the LTV but they will not allow you to take out a cheaper product on a seperate deal to your offset. It will be blindingly obvious what you are trying to do.