Can you borrow more with an offset mortgage?

adam1982

Hey,

With a straightforward mortgage we would be able to borrow around £170k based on income multiples.

We have decided to have an offset mortgage with Woolwich.

We are able to offset the mortgage by 100%. On this basis do you think they would lend slightly more? Say £200k.

Any thoughts greatly received!

getmore4less

Probably not.

adam1982

is that from experience?

_Andy_

the amount you can offset it by will not affect how much they can lend at all.

adam1982

ok thanks very much

getmore4less

Lenders will consider debt in reducing borrowings.

They are less happy to use savings to secure higher lending.

I have used savings/investments and good salary visibility to justify highish salary multiples with good LTV on the purchase of a 1/3rd house without relying on any rental incomes.

To do the same now would be much harder.

Probably better to use FD(Interest only), use £30k of the offset funds so you don't need the extra borrowing and rebuild the savings back to 100% offset.


letting a lender know you are a going to offset 100% immediately might actualy have a negative effect.

Thrugelmir

Why do want to offset a 100%?

adam1982

getmore4less wrote: »

letting a lender know you are a going to offset 100% immediately might actualy have a negative effect.

never thought of that. Make less out of you dont they.


Main reason for offsetting 100% is because i thought it would be more use than earning less interest and paying tax on it? I may be wrong, that is why im here i guess!

getmore4less

adam1982 wrote: »

never thought of that. Make less out of you dont they.

Main reason for offsetting 100% is because i thought it would be more use than earning less interest and paying tax on it? I may be wrong, that is why im here i guess!

Why do you have/need £170k in readily accessable savings, thats more than most people need.

Why not just buy with mostly cash?

One advantage of the Woolwich products are the offsetiing of cash ISAs do you need want that feature?

First direct are normaly cheaper

jrs101

adam1982 wrote: »

never thought of that. Make less out of you dont they.


Main reason for offsetting 100% is because i thought it would be more use than earning less interest and paying tax on it? I may be wrong, that is why im here i guess!

I'm in the process of setting one up with FD. Is it best to put ALL savings into the offset pot and if so, how do you work out what interest you would need to receive to make it more beneficial to put it into a savings account elsewhere?

dimbo61

Do you have savings in cash ISA,s ?
If you are paying say 3% on your mortgage and can earn 4% from a cash ISA then fill your ISA allowance