Advice required on offset mortgage

dimbo61

I have an offset mortgage with YBS who have some of the best long term fixed rate deals at the moment! the difference between the normal 5 year fix and a 5 year offset fix is only 0.1%
We have saved £££££ Thousands off our mortgage by offsetting.
Check out the 5 year deals and keep a good balance in the offset account upto £16K

collen

Actually it is not only the self-employed who can benefit from an offset mortgage. This type of mortgage can also work well with people who earn irregular commissions or bonuses and wish to use them to pay off against the mortgage, but do not want to rely on such an unpredictable income.

michaels

We have an offset - it is so flexible - when we moved we borrowed the max allowed even though we didn't need it at the time so that if we needed money for an extension we had free access at a very competitive rate. If I were remortgaging I would definitely take the ybs 5 year fix offset at 3.49% (currently on an FD tracker at 2.49%)

Jock_Tight

anskills wrote: »

Now, call me a sceptic, but this sounds far too good to be true! I just wondered if anyone on here had experience of using an offset mortgage and whether the realities of it are as good as claimed.

For ourselves an offset mortgage has been great, we switched to an RBS offset in 2007 and by this time next year we will be mortgage free!

Every penny in the offset account is working for you.
We can overpay as much as we like without penalty.

WestonDave

To be fair it was initially the case that you paid for the offset facility by higher interest rates - these days they are nearer the market norms so the cost is less whilst the benefits remain the same. For your level of LTV 3.49% either tracker or 2 year fix at First Direct is not uncompetitive, nor the YBS 5 year fix mentioned above. First Direct lets you have a number of linked accounts - we have 2 linked current accounts and 3 savings accounts - so you can feel like you have an emergency fund in savings or savings pots for the kids whilst also reducing your mortgage interest. Our experience with First Direct has been entirely positive.

anskills

michaels wrote: »

We have an offset - it is so flexible - when we moved we borrowed the max allowed even though we didn't need it at the time so that if we needed money for an extension we had free access at a very competitive rate. If I were remortgaging I would definitely take the ybs 5 year fix offset at 3.49% (currently on an FD tracker at 2.49%)

I see that once the 5 year fix has ended you go on to their standard variable rate which is 4.99%. This seems high, i would be concerned that if BOE rates go up 2% + that this rate would then be excessive. Although i guess there are no guarantees the one account 3.65% rate would not rise similarly. How simple would it be to move to another offset mortgage, i assume you wouldn't lose any benefits you have had up until then?

I like the idea of having multiple accounts i.e. separate accounts, a joint account, savings accounts etc which are all linked, like FD. Does YBS offer this also?

SteveV2

I also have an offset mortgage with the Woolwich/Barclays.

Loved how the interest reduced the term. Not so much now as the mortgage rate is so low i'm far better off keeping money in isas earning around twice the interest.

You also get a mortgage reserve which is a separate account linked to your mortgage. Think it's for 10% or what you originally borrowed at your fingertips. It grows too so the more you have paid off, even more becomes available. Was very handy when I was renovating my house. Just wrote a cheque out to myself Easily paid back via online banking.

The linked accounts are good. Ensures you never go overdrawn by setting you own levels. So if you main current account goes below £500 say, it'll take the difference from you second account. Also you can set up the opposite so anything over £1000 say, will go into you second account.

getmore4less

Apart from YBS that still offer "family & friends" offsetting I think Barclays have the best product features

WHEN the rate and setup costs are competative.

They were doing no fee, no cost, remortgages on to good base rate trackers but not so good these days.

anskills

i've noticed the following FD products:

http://mortgages.firstdirect.com/mortgage-products/product/base-rate-tracker-offset--limited-edition~74

http://mortgages.firstdirect.com/mortgage-products/product/base-rate-tracker-offset--standard~4

i like the look of them as they follow the BoE base rate as a tracker for the mortgage term, this at least makes me feel a bit safer that i won't be susceptible to a lender suddenly hiking it's SVR. it also offers multiple current and savings accounts, portability, free booking fee and no ERC, so all in all pretty flexible.

how would i work out in the long term whether i would be better paying £1500 set up fee for BoE + 1.88% or £499 for BoE + 2.49%?

also, as this is interest only, which i have no previous experience of, how would i actually work this account to ensure i can pay off my mortgage in a reduced term i.e. circa 10 years? if i pay the minimum interest amount of circa £250, but have another £600 a month to put towards mortgage payments can i overpay the interest or do i just put additional funds in the savings side of things to eventually pay off balance? sorry, slow to get my head around the ins and outs of the concept.

getmore4less

You don't seem to understand mortgage basics with coments like "can i overpay the interest"

£110k over 10 years is £917pm at 0% so £600pm won't be enough to pay off the debt in 10y

On a repayment over 10 years at 2.45% it is £1035pm you need at lest that amount each month free after expences.


I hope you are not another victim of the one account calculator.

Edit : reread first post, you think you can do this in 8 years thats £1263pm @2.45%