Offset mortgages

sarahemily

Hi

I am new to this so apologies if this in the wrong forum.

I currently have a very low tracker mortgage, due to expire and go on to the standard variable rate with Natwest 4% which will put my payment up to £450 (from £310). My mortgage outstanding is 79k, and the house is worth around 105k

Have been looking into my options, and have thought about an offset mortgage, we currently save around £800 a month (£250) which is in a sharsave scheme so couldn't be paid direct to the mortgage), based on a quote from the one account, if we paid £450 mortgage payment at their current rate, 3.75 and £550 we would reduce our mortgage term by 13 years and save 25k. This seems like a good option!

We re planning to move and buy a bigger home in the next couple of years, so the plan is to save another £25k in equity meaning we could then buy a house worth £200000 with a £50k deposite.

I have seen some negative comments about offset mortgage, and just wanted to know what the negatives are as it seem sot good to be true, I know the rates are not usually very good but it is cheaper than the standard variable rate on my current mortgage, and cheaper than the fixed I have been offered with Natwest at 4.75. Clarly the rate may go up, and probably will, but as there are no exit fees we could always move.

Any advice?

luckyfool

You can get a better rate than One Account elsewhere for Offset. Also you have to worry about One Accounts very poor track record in passing on cuts and increasing rates. You will be better off with an offset that tracks base rate for the full term. Worth speaking to a whole of market mortgage broker.