First post - Mortgage Q's

pusscat

Hi there,

This is my first post and I am hoping someone who is a bit more mathmatical than me can explain somethng about my mortgage....

My mortgage is approx half IO (with some endowments due to mature in 15 years or so!) and half repayment. It is with the Woolwich Offset Open Plan at a rate of 5.75. Interest is calculate daily on the amount of money owing to the bank (i.e. the mortgage ammount minus the amount in the openplan account)

In the next month or so the ammount in the offset account will come to more thant he amount I owe on the repayment half of the mortgage, this will in theory leave just the amount that is IO on my mortgage. If I continue paying in the same amount to the offset account as I have been doing I expect to clear the mortgage in approx 8 months.

My question is - am I better off by leaving my mortgate as it is and just increasing the amount in the offset acount until it is the same as the total mortgage, or am I better paying the repayment 50% back to the Woolwich and just having the other 50% on an IO mortgae, or does it make not a blind bit of difference?

I have tried having this conversation withthe bank and have not got a clear answer - which makes me think that they don't want me to do this....

any help much appreciated

OIMO

You have a somewhat similar situation to myself. I also have a 50% repayment, 50% IO mortgage with Woolwich OpenPlan. I have some savings in the offset, which are already "allocated" to some essential home improvements in the next few months. However I also have some ISAs (my vehicle of choice for the IO portion) that I am considering selling to pay off a chunk of the capital. I then want to overpay every month going forwards.

The same question you raised came to mind. Should I just put the ISA proceeds and the overpayment in the offset savings or take it straight off the capital owed?

As far as I can determine it makes no odds from a financial standpoint. The only difference being if it comes off the capital it is not visible from an easy withdrawl point of view. Having said that it does not sound like that is a problem for you as you have managed to build up substantial savings without blowing it all on a round the world trip or similar!

However I might well be missing something, anyone else got a view?

cheers
OIMO