staff mortgage Vs Offset mortgage??

smegheads

Hi,

I want to pay off my mortgage in the shortest time possible without using my savings and would like some advice from you all.

I currently work for a bank and have a staff mortgage which tracks the base rate, so currently 0.5%, plus the government cut for benefit in kind. I have £53k outstanding with 16 years left on my mortgage term. My monthly payment is £309.43 and i overpay £190. I have no other debt and just under £10k in savings.

My question is would i be better ditching the staff mortgage and going for an offset mortgage?

from what i can see from the calculators available, on my current mortgage inc overpayment i become MF in 10 years and on the offset one i looked at it was 5 years. Is this correct??

Any advice greatfuly received!

Lea

abouttimetoo

HI Smegheads

I'm afraid I don't know the answer - just giving you a shameless bump in the hopes someone else can help you.

RenovationMan

Can you make overpayments on your staff mortgage? I cant imagine that you'd be able to to ever beat the rate they offer you, if I were you I would either make overpayments onto the mortgage, reduce the mortgage term (if you cant make overpayments) or put your money into a savings account and pay off the whole mortgage balance when you've saved enough (if you cant make overpayments or reduce the term).

I definitely wouldnt change my mortgage from such a brilliant deal!

Jonbvn

OP,

You need to define what the effective rate of your mortgage is, including the benefit in kind portion to HMRC. Given your extremely low rate, it is far better to save your money rather than OP your mortgage, although not a popular view on this "single-minded" forum.

uzubairu

Jonbvn wrote: »

OP,

You need to define what the effective rate of your mortgage is, including the benefit in kind portion to HMRC. Given your extremely low rate, it is far better to save your money rather than OP your mortgage, although not a popular view on this "single-minded" forum.

I think the general, popular view is that if you can get a better rate saving after tax (ie. other savings accounts) than your current mortgage rate, then you should save your overpayments in those accounts instead of overpaying directly into the mortgage.

Most people can't get better rates so they overpay their mortgage directly. There are some who prefer to see the mortgage balance reduce regularly as it motivates them (even if it isn't the most efficient method).

Next month I'm moving from a fixed rate of 4.79% to a tracker of 1.79% + base (currently 2.29) and I have already set up 5 regular savings accounts for my overpayments.
Up until now my overpayments went directly into the mortgage as I couldn't get a better rate saving seperately.

0.5% is a great deal, and you wouldn't need to look far to find better savings rates.