Mortgage Current Account Woolwich

keadd

Hi Everyone,

When I took out my mortgage it was a condition I had to have the above. It comes with a debit card, cheque book etc. Ive just looked on my online banking it has a £100 overdraft.

What is this account actually for? Is it an benefit to me?

Cheers

blueberrypie

As you make payments on your mortgage, the overdraft limit on this account will increase. If you use the overdraft, it will incur interest at whatever Woolwich's SVR is at that time. It's likely to be a much cheaper way to borrow money than any of the usual routes (standard overdraft, credit card, bank loan etc).

Essentially it's an available source of cheap borrowing. If you don't use it, there's no charge. Whether it's of benefit to you depends on whether you use it, I suppose.

getmore4less

Just to clarify Ithink the folowing applies.

blueberrypie wrote: »

As you make overpayments on your mortgage, the overdraft limit on this account will increase. If you use the overdraft, it will incur interest at whatever Woolwich's SVR is at that time or at the mortgage rate if an offset mortgage. It's likely to be a much cheaper way to borrow money than any of the usual routes (standard overdraft, credit card, bank loan etc).

Essentially it's an available source of cheap borrowing. If you don't use it, there's no charge. Whether it's of benefit to you depends on whether you use it, I suppose.

blueberrypie

As the balance owed goes down, the mortgage reserve goes up, even if you've never made any overpayments.

keadd

Sound good to me, could be handy at some stage!!

Does anyone really know what the base rate is going to be doing over the next few years? It's just my mortgage rate is fixed at 5.99% untill july, it then changes to .5% above the barclays bank base rate.....

Which if the base rate stays as it is now, it'ss be about 1%!!!!!!!!

I cant wait!

blueberrypie

keadd wrote: »

Sound good to me, could be handy at some stage!!

I think of it as really-big-emergency-funds - really big in that it would be a really big emergency, because I'd have to have used up my emergency savings first.

Does anyone really know what the base rate is going to be doing over the next few years?

Nope, nobody really knows. Lots of people have opinions, some of them quite firmly held, but they are just that: opinions.

It's just my mortgage rate is fixed at 5.99% untill july, it then changes to .5% above the barclays bank base rate.....

Which if the base rate stays as it is now, it'ss be about 1%!!!!!!!!

Yep. Those of us on trackers are doing very well out of them now. Just remember that if the base rate goes up, your payment will follow - get overpaying while it's low :-)

getmore4less

keadd wrote: »

Sound good to me, could be handy at some stage!!

Does anyone really know what the base rate is going to be doing over the next few years? It's just my mortgage rate is fixed at 5.99% untill july, it then changes to .5% above the barclays bank base rate.....

Which if the base rate stays as it is now, it'ss be about 1%!!!!!!!!

I cant wait!

You will probably never need to remortgage again unless you want more money or move.

If you liked fixed rates the trick is to look for the best fix you can find and allocate that amount to your mortgage, saving it while the saving rates are higher tan the mortgage.
It is very low risk that you you would be worse off.