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One account - help me work this out
moneymatt_2
Posts: 38 Forumite
Maybe I could work this out if it wasn't late in the evening, but I'm struggling.
I'm trying to work out whether an offset mortgage might be a good idea in this circumstance:
My mortgage consists of the initial loan and a further advance of 30k. The further advance is on a fixed rate with 2 years to run and repayment fees if I pay it off in that 2 years.
What I plan to do is clear the main loan in the next 2/3 years so I've just got the further advance. By that point, I hope to have the same amount in savings so I could pay off the further advance. But I'm thinking I might remortgage it to an offset so that I can keep my savings (so I've got some funds at the ready should I need them) but still pay no mortgage interest.
The only downside is that the 30k is now depreciating in value thanks to inflation (as I'm not receiving any interest). If I paid off the loan then I don't have any money depreciating in value. Does that mean it'd be better just to pay off the mortgage. I kinda feel like I'm missing something.
EDIT: Brain cells kicked in. The depreciation is also affecting the loan amount. Either way, I've effectively got a balance of 0, so I'm no better or worse off but do have £30k to draw on if needed.
I'm trying to work out whether an offset mortgage might be a good idea in this circumstance:
My mortgage consists of the initial loan and a further advance of 30k. The further advance is on a fixed rate with 2 years to run and repayment fees if I pay it off in that 2 years.
What I plan to do is clear the main loan in the next 2/3 years so I've just got the further advance. By that point, I hope to have the same amount in savings so I could pay off the further advance. But I'm thinking I might remortgage it to an offset so that I can keep my savings (so I've got some funds at the ready should I need them) but still pay no mortgage interest.
The only downside is that the 30k is now depreciating in value thanks to inflation (as I'm not receiving any interest). If I paid off the loan then I don't have any money depreciating in value. Does that mean it'd be better just to pay off the mortgage. I kinda feel like I'm missing something.
EDIT: Brain cells kicked in. The depreciation is also affecting the loan amount. Either way, I've effectively got a balance of 0, so I'm no better or worse off but do have £30k to draw on if needed.
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