Offset Mortgages

hillcats

I understand the basic principle when an offset mortgage is being offset with a lower amount of savings than the mortgage debt, but what happens (for example) if the savings amount should increase above the total debt of the mortgage?

Cleaver

This happened to us with The One Account. Not sure if all the products are the same, but it just essentially became a current account with a very large overdraft. We ended up buying a new house after a few months after becoming mortgage free so now have a mortgage again. I'm not sure if The One Account would let you keep it as a current account indefinitely.

property.advert

You want to watch what happens as Nat West screwed over a large number of their offset mortgage holders by introducing or applying conditions which stated that the draw down was limited to some amount or other.

Basically, if you have an asset values at 500k and used to owe 400k but now only owe 100k, then they stopped you spending the other 300k. To the bean counters, that 300k appears as an on balance sheet liability, just as it would with a credit card limit. The fact that it is backed by a £500k property is largely immaterial.

getmore4less

hillcats wrote: »

I understand the basic principle when an offset mortgage is being offset with a lower amount of savings than the mortgage debt, but what happens (for example) if the savings amount should increase above the total debt of the mortgage?

With barclays positive net ballance in the offset pool gets nothing.

getmore4less

property.advert wrote: »

You want to watch what happens as Nat West screwed over a large number of their offset mortgage holders by introducing or applying conditions which stated that the draw down was limited to some amount or other.

Basically, if you have an asset values at 500k and used to owe 400k but now only owe 100k, then they stopped you spending the other 300k. To the bean counters, that 300k appears as an on balance sheet liability, just as it would with a credit card limit. The fact that it is backed by a £500k property is largely immaterial.

I dont think they were not offsets, just you cna have overpayments back mortgages

With offsets the amount sits in a seperte account and you can just spend it.

Thrugelmir

Bad financial management if offset balance exceeds mortgage balance.

Your lender will be extremely happy as you are depositing money interest free.