Lifetime Tracker - no fees - Good idea?

Catslovelycats

retepetsir wrote: »

That's very interesting! I took out the 90% LTV Lifetime Tracker with them last February and am still on that rate...I don't appear to have internet banking set up for the mortgage account (I mainly bank with Barclays so will need to do that).

Does it work out this percentage for you or did you do it yourself?

Thanks

The website will ask you for mortgage amount needed and value of house and works it out for you from that.:)

property.advert

Another option is to mix and match the mortgage with part fixed, part variable or part offset etc.

Why ? insulation against rises from the fixed element and offsetting / ability to overpay from the variable part but with access to the cash paid down as a cheap line of revolving credit. e.g. want a new car for £20,000 ? no need to get an expensive loan, just drawn down £20,000 at 3.29% or whatever. Meanwhile your spare cash offsets your liability day by day.

No point having an offset for way more than you ever have in ready cash nor more than you would ever want to borrow back.

andymg

property.advert wrote: »

Another option is to mix and match the mortgage with part fixed, part variable or part offset etc.

Why ? insulation against rises from the fixed element and offsetting / ability to overpay from the variable part but with access to the cash paid down as a cheap line of revolving credit. e.g. want a new car for £20,000 ? no need to get an expensive loan, just drawn down £20,000 at 3.29% or whatever. Meanwhile your spare cash offsets your liability day by day.

No point having an offset for way more than you ever have in ready cash nor more than you would ever want to borrow back.

Very interesting, never heard it before! How do you go about it? Is it with the same bank?

I'm with HSBC at the moment but they dont have a offset account so I'm saving with other banks giving higher interest rates on savings.

Thrugelmir

property.advert wrote: »

Why ? insulation against rises from the fixed element and offsetting / ability to overpay from the variable part but with access to the cash paid down as a cheap line of revolving credit. e.g. want a new car for £20,000 ? no need to get an expensive loan, just drawn down £20,000 at 3.29% or whatever. Meanwhile your spare cash offsets your liability day by day.

By borrowing more at the outset (increased LTV) you pay a higher rate on the amount your are borrowing. In additional you are committed to higher monthly repayments.

So why not just borrow less at a cheaper rate. Then save what you can into an ISA or regular savings scheme?

property.advert

The usual mix is part fixed, part variable. Another option is part interest only, part repayment. You could in theory have multiple options but I doubt any lender has sophisticated enough software to provide a user interface allowing this functionality. They do have the capability to manage this internally from a funding angle but probably not enough expertise to price it very well either. Nevermind, we are getting far too complex here.

So you want to borrow £100k. Then really simply to think about it as two mortgages if you want. One fixed for £50k (does not have to be equal) and another variable for £50k. Now if you could get the variable £50k on offset and you sometimes ran a balance up to £50k in your account, you would, at the margins, only be paying the fixed interest element as the variable part would be wholly covered by your cash balance.

Presuming you are a 40% taxpayer, if you were paying 3.29% on the variable part, you would have to earn interest of 5.48% to get a net 3.29% and you'd have to get this on almost instant access money, not term deposits.

If you only ever have up to £20k floating around, then simply have £20k or £25k on offset and the rest on fixed or variable or indeed, if they can handle it, a split of all three options, if that matches your risk profile. If you are able to do even simple forecasting in Excel, you can run scenarios where you effectively create your won structured product, where you see just what happens as interest rates change.

You should also plot your interpretation of how interest rates will rise going forward against the fixed rate available now and see where the break even point is say over 5 yeas. My guess is that even with fixed rates so low, the maths will err on the side of going with a low variable.

property.advert

Thrugelmir wrote: »

By borrowing more at the outset (increased LTV) you pay a higher rate on the amount your are borrowing. In additional you are committed to higher monthly repayments.

So why not just borrow less at a cheaper rate. Then save what you can into an ISA or regular savings scheme?

Not quite. The OP is on the lowest rate already and thus cannot benefit from paying down more initially.

Even further, the OP cannot pay down more because they don't have it. What would be offset would be the future income / savings.

getmore4less

Which lenders allow offset and non offset to be mixed?