Should I remortgage to offset? advice please

palpitations_2

Hello

Situation is:Me: single, age 49
Salary: £16,000.00 pa

House just valued at around £315,000.00

Mortgage outstanding £55,000.00

Savings & current accounts including ISA's total £25,000
(will be using 5k to do some home improvements)

Currently on Santander variable but have spoken to Barclays and they have offered me an offset mortgage that will reduce my monthly payments to £132 per month. This is a saving of £90 per month!
If I then offset with my savings it the takes the payment down to £114 per month.

Barclays fees are £999 to pay + 1% of the loan if I repaid mortgage in first 3 years
Overpayment of 10% allowed each year

I aim to move in about 5 years and in the meantime I hope to pay off some of the capital yearly.

I looked at FD but do not earn enough salary.

What about ONE ACCOUNT? I looked at their website and they look competive but I have not called them to discuss.

I am a bit 'old school' and not really up to speed on offset mortgages. On paper it looks good but is it the best deal based on my circumstances?

I am looking to make a decision over this weekend

Anyone with knowledge of offset that can offer some helpful advice based on my circumstances?

Many thanks to you

Ms_Sophia

There are a couple of questions I believe needed to be clarified first:

- What is savings % you get on your savings now (net)?
- What % mortgage interest rate do you pay now?
- What % mortgage interest rate have Barclay offered you on the offset product?

palpitations_2

Ms_Sophia wrote: »

There are a couple of questions I believe needed to be clarified first:

- What is savings % you get on your savings now (net)?
- What % mortgage interest rate do you pay now?
- What % mortgage interest rate have Barclay offered you on the offset product?

Hi Ms Sophia

Thank you for replying:

Net on savings is 0.75%

Mortgage rate currently standard variable 4.24%
just paid 15k off it- was 70k and is now 55k

Barclays have offered 2.98%

Ms_Sophia

Then switching to Barclays offset makes sense to me:
- You'd be paying much less interest than now - 2.98% vs. 4.24%
- You'd be paying this interest on a much smaller amount (55k-25k)=£30k vs. currently £55k.
- Your savings would be effectively 'earning' you 2.98% interest vs. 0.75% now.

Talking into account the Barclays fee you'd be better off from 11th month of your new mortgage (according to my rough calcs).

Just don't repay mortgage in full in first 3 years

dimbo61

Have you looked at YBS deals and that £999 fee is nearly 2% of your mortgage so maybe YBS might work out cheaper.
They have a 2.59% offset tracker fee £95 with a LTV below 75% which you have but its only for 2 years or look at the fixed deals they have

palpitations_2

Hello

Following a suggestion for helpful posters I contacted YBS yesterday and they have made me an offer on the remortgage.

2yr fixed rate offset at 3.49% -their fee is £95 plus £23.50 for mortgage transfer document plus Land registry fee £175
add my solicitors cost - no idea how much

property 310k
mortgage 55k
savings 25k

3yr fixed rate offset is 3.99% - I am thinking for the extra .05% it might be worth me locking in for 3 years. I am in the situation where it does help me to know what my outgoings are.

These figures still add up to me because at the moment I am on Santander SVR and no offsetting.

I went back to Santander yesterday and they have offered me 2 year tracker at 2.99% with NO fee or a 2 year fixed at 3.79% with NO fee- but I wouldn't be offsetting the savings

Just need to decide 2 or 3 years fixed with YBS

It makes sense to change to a new lender - doesn't it?

Thank you

dimbo61

Poor customer service and no chance to offset the savings !!
3 year offset fix looks good and gives you security to overpay the mortgage or build up savings in the offset pot
Good luck in your decision