Offset mortgage,is this right?

surreysaver

taxi73 wrote: »

...it's a great product if used right and has a lot of flexibilty..

and if Santander don't c0ck it up!

surreysaver

getmore4less wrote: »

Iteresting approach but thats Santander for you.

Well, I've had it since Abbey National days. But they're as bad as each other!

getmore4less

vacheron wrote: »

This makes sense, though it does seem a little odd and unconventional!

I assume therefore that this money deposited by the bank into the offset account must recieve special dispensation so that it is not considered as income and therefore liable to taxation (which is one of the great benefits of offsetting)?

That was my initial thought, TAX

It can be considered as a normal deposit of excess funds not needed to pay interest due on the net balance of mortgage less offset savings.


Like you I think the Barclays/Woolwich seems to have great offset options except they dropped family and friends but not so easy to get a good/free deal at good interest rates.

Interest calculated daily and added to the mortgage account monthly

Payment can be fixed at higher amounts than needed or varied to keep you on track for full term taking account of the interest savings from the offset.

Any overpayments recoverable through the offset current account at same rate as mortgage

can offset cash ISAs.

can be setup to have no savings so still qualify for benifits.

dwsjarcmcd

surreysaver wrote: »

I have a Santander offset mortgage. They way it works is, although the monthly payments stay the same, the savings pot is credited with the amount that you would have saved if they did it normally. So instead of your monthly payments going down, your savings will go up. If that makes sense?

If that is the case then surely the savings growth is taxed? If so, it would be a very inefficient variant of an offset

surreysaver

Its listed as an overpayment. So I suppose technically its a refund?

Tony69

surreysaver wrote: »

I have a Santander offset mortgage. They way it works is, although the monthly payments stay the same, the savings pot is credited with the amount that you would have saved if they did it normally. So instead of your monthly payments going down, your savings will go up. If that makes sense?

My Mortgage Advisor hasn't had the decency to get back to me so I rang Santander myself and they confirmed what surreysaver said that the monthly payment stays the same but the money in the savings pot increases by the same mortgage interest rate.

Twiddy

Too confusing for me, FD it is!!

Cheers
T