First Direct Offset Mortgage

hr_money

Hi,

Can anyone give some advice please?

We have a first direct offset mortgage with approx. £139,000 left to pay at just under 19 years left on the term. LTV ratio is 43%. This rate is at 3.49%. We have little in the way of savings (although this will change as of September when childcare payments greatly reduce). The current mortgage rate expires beginning of December and I know I'm a bit early in thinking of remortgage, but wanted to get my facts straight.

With little in savings to offset currently, would it be better to just take out a tracker repayment mortgage? This would seem to reduce the monthly repayment, but would not give so much flexibility. Obviously this is all speculative and depends on what the BoE base rate does over the next few months, but generally, are offset mortgages not worthing going for - they seem to be highly promoted.

Thanks in advance.

Crashandburn

With little in savings and happy on a tracker deal, you could drop the rate from 3.49% to 2.19% ie the equivalent interest saving of having over £50k offset against your £139k mortgage at 3.49%. You seem to pay a premium for the offset and if not using it, then little point.

Check what floating balance you have on the current before making as decision because if you keep good money/high income, then this will need to be factored into the reasons for change.

hr_money

Crashandburn wrote: »

With little in savings and happy on a tracker deal, you could drop the rate from 3.49% to 2.19% ie the equivalent interest saving of having over £50k offset against your £139k mortgage at 3.49%. You seem to pay a premium for the offset and if not using it, then little point.

Check what floating balance you have on the current before making as decision because if you keep good money/high income, then this will need to be factored into the reasons for change.

Thanks for responding - just to double-check, you are suggesting that we would need £50k in savings against the offset mortgage in order to match going on to a 2.19% tracker repayment?

Crashandburn

£139k interest at 2.19% is circa £3k - £87k interest at 3.49% is also circa £3k

Obviously this simple way of doing it doesn't account for daily fluctuations in your current account but it gives a quick overview

hr_money

Crashandburn wrote: »

£139k interest at 2.19% is circa £3k - £87k interest at 3.49% is also circa £3k

Obviously this simple way of doing it doesn't account for daily fluctuations in your current account but it gives a quick overview

Many thanks - will have to see what happens to tracker mortgages over the next few months, but this has given me something to go on.