offset mortgage - does it make sense for me?

free4440273

hi all, first of all i know is there the following link to offset mortgage calculations, but i could not find a thread explaining in laypersons terms what it is exactly. as is so often the case on forums all you hear about is the bad. anyway i did a goole search just to get 'clued up' about it.
http://forums.moneysavingexpert.com/showthread.html?t=471

could you kind folk tell me whether you think it is worth it for me: i am buying a house for £430k. i have altogether £260k in a high interest savings account. would offsetting be sensible for me? also, is an offset rate fixed for a particular period like an ordinary fixed rate mortgage? also, does it work in the same way as a repayment (as opposed to interest only) mortgage? if it is essentially only an interest only mortgage with a few 'extras' then i am absolutely not interested. i should point out i do not intend to 'touch' my savings as is - at the moment the interest i earn on the savings is about £800a month. i do work also in a full time job. also, if there is a link or sticky on the site explaining what an offset mortgage is could someone tell me - i was surprised there wasn't one. thanks as always for your help. have a lovely Monday week also

Rick62

There are 3 main types of flexible mortgage:

Flexible: where you can make unlimited overpayments and then draw back down again at the same rate and without additional fees. Northern Rock has some flexible mortgages, both Fixed and Tracker and at competitive rates.

Offset: Where you have one or more current and/or deposit accounts 'set off' against your mortgage balance. The amount in your accounts reduces your effective mortgage by the same amount, thus saving you money. This is tax efficient, but usually the benefit is received by the mortgage capital being reduced rather than the monthly payment being reduced. Two good offset lenders are Intelligent Finance and Standard Life. Their rates are not bad, maybe a quarter point higher than leading rates.

Current Account Mortgage: Like the famous OneAccount. Is actually, effectively, a giant overdraft securred on your property. The OneAccount are the main player in this category, but their rates tend to be high making the product uncompetitive in most cases.

Robert_Sterling

Insufficient information here to be able to answer your query.