Barclays 'offset' mortgage ripoff?

Ivor_Headache

:mad:Six years ago we took out an 'offset' mortgage with Barclays. They provided us with an 'illustration' as to by how much the term could be reduced provided certain criteria were met. The illustration showed it could be reduced by 7 months.The criteria was by far exceeded. They monies passing through the offset account, was conciderably more than required, and at certain times, many thousands of pounds were left on deposit to increase the offset value. Half way through the term. we noticed the saving did not appear to be as much as they should have been. It appears that Barclays hide behind one small paragraph in an insignificant booklet called' Guide to Mortgages' in which it says something like, 'to help you with your finacial planning, we will not alter your monthly repayment.' In fact if you want to alter the repayment, you have to phone and tell them. There is absolutley no mention of this tiny little phrase in any other of the myriad of booklets( almost all of which at some point mention interest rates) provided with the mortgage. It is not mentioned in a booklet relating to interest rate changes and how they will be applied to your account within 30 days of the changes, there is not mention of it in the mortgage offer letter, and certainly no mention of it in the illustration. This does say the illustration could change if interest rates alter, but they do not mention in that event, that, unlike any other mortgage provider in this country, they will not increase or decrease the monthly repayment ammount, even though every single payment was taken by direct debit. Any one any suggestion or has anyone had a similar experience with Barclays.:mad:

Ivor Headache

luckyfool

Standard practice. You're complaining that they kept your monthly payment at the higher level so that your mortgage balance came down, instead of reducing your mortgage payment? Surely if they did this then your mortgage term will have reduced?

Offset lenders give you different options in terms of having your payments recalculated annually, monthly, or on request, yours has stayed on the Barclays default selection. It has not disadvantaged you in any way, nor has it "earned" Barclays any extra money so I don't see how it can be termed a "rip off".

What did you want them to do? Reduce your payments based on your offset balance? If they did this then your mortgage term would have stayed exactly the same, which seems to be the opposite of what you want?

getmore4less

We love our Barclays offset it was the best avaialble at the time for features and cost.

I don't have an annual statement handy but I think it tells you on every annual statement they will keep the payment the same. It also tells you what the remaining term will be so you see how the offset savings have reduced the term.

The booklet that you should have read does say that the payments are calculated each year, they would have gone up if the rates had risen but they keep them the same if rates go down

THIS SAVES YOU MONEY.

This is the info on my 5 page monthly statements do you get these?
how much you are saving every day from your offset money.
How mch you have saved in the cuurent month
Total savings so far to date.

All the overpayments show up in the mortgage reserve so you can get them back if you want and this is also shown on the monthly statements as the reserve overdraft limit(at the mortgage rate).

Also on my monthly statement is the following(page 3 at the bottom of the daily information)

"An offset mortgage allows you the choice to offset against the monhtly payment or the mortage term"

with a freephone number to change it.


So if you get monthly statements with the same information they have not exacly been keeping this a secret.


NOTE: if they had varied the payment(or you had changed it) to keep the same term this reduces the savings you would have made.

Now how exactly have you been riped off?

CLAPTON

Sounds to me they did exactly what I would have wanted them to do, so that now you have paid off more of the capital and reduced the total charge for interest.

surely you noticed what your monthly DD was ?

InMyDreams

My interpretation of the OP is that he feels ripped off because his monthly payments haven't been reduced, NOR has his term been reduced as much as he was expecting. You would expect one or the other. (Not sure why he's cross that payments are the same though, as from the rest of his post it does seem that that is what his intention was.)

Ivor_Headache wrote: »

They monies passing through the offset account, was conciderably more than required, and at certain times, many thousands of pounds were left on deposit to increase the offset value.

It's this bit that jumps out at me. Money 'passing through' the account will make little difference. The savings will only be made from the money that is left there, which you say has only happened at 'certain times'. Could this be the 'problem'?

getmore4less

Forgot to mention, because the rates have dropped so much the savings from offseting are not that much these days in fact they are tiny.

Our Barclays rate is now 1.45% so the max saving per year is £1450 per £100k mortgage if 100% offet.

So a couple of thousand in a current account would save £29 per year

Keeping the payment the same saves MUCH more overal.

kai666

Where's the rip off in this story?

Chinkle

Unfortunately I think the OP has failed to understand that monies passing through are just that and only have an impact for the time they are in the account.

To reduce either the term or the interest payment they need to stay in the account permanently.

Thrugelmir

Ivor_Headache wrote: »

:mad:Six years ago we took out an 'offset' mortgage with Barclays. They provided us with an 'illustration' as to by how much the term could be reduced provided certain criteria were met. The illustration showed it could be reduced by 7 months.

And this is precisely what will happen. Your original 25 year term (?) of the mortgage will be shortened by the interest earnt from the offset facility reducing your total balance.

This will only be the case if you maintain your monthly repayments at the original level, adjusted for interest rate changes.

Suggest you calm down and :beer:.

As in the longer term you'll benefit from using the account the way you have.

dunstonh

kai666 wrote: »

Where's the rip off in this story?

Same as most threads where someone posts "rip off". They dont understand and prefer to rant than learn.

Barclays have a lot to answer for. Their mis-selling of regulated financial services is one of the highest of all the banks and to highlight how bad they have even taking to returning cheques payable to investment firms as "refer to drawer" in an attempt to get the person to come in and see their own sales reps. However, in this case, there is nothing wrong.