Offset mortgages

ianmac42

Hi there all,

Have been looking at taking out a First Direct Offset Tracker, but not sure if it will actually save me money compared to a normal mortgage. Details are:

Home value: £180,000
Current mortgage: £36,000
Would also like to borrow £10,000 for car purchase
Current mortgage interest rate: Nationwide SVR 2.5%
Term left on current mortgage: 8 years
Currently make regular overpayments of £200 per month
Would put savings in Offset too: £6000

My aim is to pay off the mortgage sooner than 8 years.

Any ideas?

thanks,
Ian

getmore4less

Get a cheaper car.

redpete

What's the interest rate on the offset mortgage? How much are the exit fees on the current mortgage and the set-up costs for the new mortgage? Would you be able to get the extra £10k added to the existing mortgage, if so what would it cost to set up?

VIGILANT22

ianmac42 wrote: »

Hi there all,

Have been looking at taking out a First Direct Offset Tracker, but not sure if it will actually save me money compared to a normal mortgage. Details are:

Home value: £180,000
Current mortgage: £36,000
Would also like to borrow £10,000 for car purchase
Current mortgage interest rate: Nationwide SVR 2.5%
Term left on current mortgage: 8 years
Currently make regular overpayments of £200 per month
Would put savings in Offset too: £6000

My aim is to pay off the mortgage sooner than 8 years.

Any ideas?

thanks,
Ian

Savings, borrowing, offset!!

I think you need to go back and read again what OFFSET MORTGAGES really mean!!.....ie ............redraw capital

maninthestreet

Buy a car using the £6k savings you have, keep your current mortgage.

[Deleted User]

ianmac42 wrote: »

Currently make regular overpayments of £200 per month
Would put savings in Offset too: £6000
Ian

The savings that you are referring to as being £6000, is this money that you've overpaid into the mortgage or is it a separate savings account?
If it is separate money then how much in overpayments have you made into your mortgage? You could withdraw your overpayments and combine with your savings to buy the car.

VIGILANT22

CR10 wrote: »

The savings that you are referring to as being £6000, is this money that you've overpaid into the mortgage or is it a separate savings account?
If it is separate money then how much in overpayments have you made into your mortgage? You could withdraw your overpayments and combine with your savings to buy the car.

That's if the mortgage has a "Borrow Back" facility........

[Deleted User]

VIGILANT22 wrote: »

That's if the mortgage has a "Borrow Back" facility........

Good point. Worth checking out though.

ianmac42

Wow, thanks for all the replies.

Offset tracker is 2.99%, no setup fees.
No exit fees on current mortgage.
The £6000 is £5000 overpayments and £1000 in ISA.
But the £6000 is not all money I can spend, as it's the kids savings for uni, so was thinking could leave it floating in an offset.
Yes there is a borrow back facility.

VIGILANT22

ianmac42 wrote: »

Wow, thanks for all the replies.

Offset tracker is 2.99%, no setup fees.
No exit fees on current mortgage.
The £6000 is £5000 overpayments and £1000 in ISA.
But the £6000 is not all money I can spend, as it's the kids savings for uni, so was thinking could leave it floating in an offset.
Yes there is a borrow back facility.

Are you saying you have a borrow back facility on yr current mortgage?

LittleMissAspie

Unless I've missed something, would it not be better to remortgage on SVR to add 10k, then overpay as much as you're allowed and also save until savings equal outstanding mortgage, then pay it off?

I'm just not sure that half a percent would save you very much with such a small mortgage.