Keeping First Direct Offset open for cheap credit?

Temrael

Hi all,

We are in the process of agressively paying off our FD Offset and with a bit of hard work may finish as soon as in the next 6 months.

However, with our son headed to uni this year and daughter possibly off to uni after that, the thought occurs that access to cheap lending (currently 2.49%) by way of the FD mortgage borrow back facility might be quite useful.

Has anyone got experience of keeping their FD offset mortgage open for that purpose by just keeping a £100 or something in it?

If so, were FD ok with this?

Are you able to just swap to making interest only payments (so you don't accidentally pay it off and close the account)?

dwsjarcmcd

I am doing just that. I opened a FD offset as a backup for other potential things and have never drawn down a penny since it was opened. I work away from home and needed to buy a flat, which I did with my own money but wanted an additional contingency fund. I have a number of potential uses if the need ever arises from a new car to repaying a loan on a property abroad, if interest rates rise significantly in Europe.

At the moment it doesn't look as though I will need it but it is not costing me anything but you never know what the future holds and I like the flexibility of having access to fast, cheap credit, if need be.

vacheron

We did the same with our Barclays offset when we took it out last year.

We applied to borrow 70% loan to value even though we only needed 15% LTV (made no difference to us as the fees were exactly the same) and this allows us instant access to 70% of our original savings at the mortgage rate.

As we are on a 25 year repayment mortgage we also used the option of reducing our monthy mortgage payments rather than overpaying and instead diverted the saved cash into the offset savings accounts to keep the available offset funds maximised. Keeping the cash as savings rather than overpaying the mortgage account also ensures that the cash remains liquid and can't be clawed back at the whim of the bank if they decide to reduce our mortgage overdraft facility etc.

Once we are 100% offset,which we hope to be in the next few months, we will set up a standing order to cover the capital repayment from our savings account for the next 24 years which will provide a slowly diminishing mortgage rate overdraft for cars, kids university, extensions, other property, etc until I am 60. :-)

PS, if you haven't noticed, I like offset mortgages.