Offset Mortgage Savings

nofuse

My partner and I are thinking of getting a FirstDirect offset mortgage for our new house, we are looking to take out an initial loan of £130,000 then after the sale of her house we should be left with about £100,000 cash.

Should we just pay off £100,000 on our FirstDirect Mortgage or put it in the offset savings account so we can borrow it if needed, this meaning we would only pay interest on the remaining £30,000 of the mortgage?

And if FirstDirect collapse I know we are covered for £50,000 each but as I understand it any debts that you have with that organisation would be taken in to consideration, so am I right in thinking that the £50,000 each that we're covered for would reduce the debt on our mortgage to £30,000?

dimbo61

You need to read the terms of the FD offset mortgage to see if they will allow you to pay off some of the mortgage.
Having a £130K mortgage with £100K in the offset account will reduce the amount of interest you pay on the mortgage each month.
Now I have an offset mortgage with YBS and pay gross ( ignores money in offset account) so I pay the same each month but much more comes off the capital as I pay less interest.
How is your job security ???
Having £100K in savings means no means tested benefits.
Do you really need £100K in an offset account ?
If it was me I would reduce the mortgage by £84K leaving £16K in the offset ( as an emergency fund) and have a smaller mortgage IF ALLOWED!

iamana1ias

dimbo61 wrote: »

Having £100K in savings means no means tested benefits.
!

having £100k in savings means no benefits are needed!

nofuse

I could do several things with the £100,000, put in other saving accounts etc but as rates are low at the moment and me being a high rate tax payer I want the money to work hard for me, the feature of having up to £100,000 at 0.49% above the base rate works for me.