Am I able to switch to a new mortgage?

Richardi]I

Hi guys,
I hope someone can help. I came to the end of my 3 year fixed mortgage a while ago and am now on the SVR of 3.99% with 26 years and 2 months left.
I have £155,352 left to pay but my property is now valued at approx. £150,000, meaning I have a LTV of roughly 103%.
I spoke to my current lender (Scottish Widows) and the only real option I have with them is to stay on the current deal and make overpayments or open a savings account with them that offests against the mortgage. I only have about £2,500 in savings at the moment, but I could afford to pay a bit more on my monthly payments (currently they're £800 but I could pay a few hundred more if worthwhile.
I'e read though all the guides here which are fantastic, however, I've now overloaded my brain and don't know what the best option is or if it's even possible to get a lower interest rate due to 103% LTV.
The mortgage finder came back with a 2.79% First Direct offest tracker mortgage, but if I try the same search criteria on their site I get nothing so I fear that the result I got was a mistake.
Any advice would be greatly appreciated.

_Andy_

You will not be able to change lenders given your LTV.

Richardi]I

I thought so
In that case, would I be best paying a few £k off or monthly overpayments, or opening the savings account that offests against the mortgage and putting a few £k in there and added an extra £500 or so monthly to this? (at least this would help starting to build up a deposit for the future - I hope to buy a new house in a few years but possibly keep the current one and rent0

dimbo61

Why not do both and save into the offset/overpay by 50/50% each month and that way you are building up your savings and reducing your mortgage debt

Richardi]I

Thanks dimbo, that's what i've ben thinking. Only thing is, i'm not sure what the difference between offset savings and overpayments would be in terms of the amount it would save me over the next few years. Surely paying off more of the capital loan would result in much bigger savings over time? Only thing holding me back on this is the idea of renting my current place and needing a deposit for a new mortgage on a new home

opinions4u

Assuming you can withdraw easily from the offset (surely that's one of the features?) you should pile as much as you can in to the offset.

Paying in to an offset account should have exactly the same benefit cost wise as reducing the mortgage debt.

Paying in to the offset will save you more mortgage interest than it would earn in any easy access savings account, save you a tax bill that normal savings interest would generate and presumably allow you to get the money back if/when you need it for other things.

Richardi]I

Thanks for the advice guy. Posted my offset savings account application form today
Now looking into MBNA super balance transfer credit cards to try make the most of it

Thrugelmir

'Richardi wrote:

I;43264948'] Only thing holding me back on this is the idea of renting my current place and needing a deposit for a new mortgage on a new home

I would focus on building some equity up to fund your new home. Worry about renting or selling when the actual time arrives.