Total mortgage confusion!!!

sjl1970

There are just so many options out there!

A few questions - currently looking at selling our house, moving away and renting for up to 12 months (get to know new area etc) and then buying again. For the purposes of getting another mortgage in 12 months are we still classed as moving? We don't become FTBs do we?

Now onto the mortgage options, I have been looking at offset and repayment mortgages, the mortgage numbers we would be looking at are:

House value £280,000
Mortgage £180,000 (LTV just under 65%)
Savings £30,000

Plus we would be looking at hopefully saving another £500 - £1000 per month and using this to either top up our saving account or make overpayments to the mortgage to reduce the term. I just don't know which would be best?

Also, do all offset mortgages just pay off the interest? I don't want the added worry of having to pay off the capital in x years time, do I therefore have to go down the re-payment route?

Sorry for all the questions, it's just so confusing!

Thanks

ACG

No you wouldnt be a first time buyer - its usually around 18 months.

65% LTV is very good, you will get some good deals.

Offset is where you have savings in your account. Those savings mean you do not pay interest on that part of the mortgage...but you still have to make repayments.
They can be good for higher rate tax payers or those that receive lump sum payments (bonuses, dividends etc).

sjl1970

Thanks, yes we are higher rate tax payers and are looking at paying the mortgage off as quickly as we can with overpayments/ offsetting - it's just knowing which would be the better option. I always though something like the old Virgin One Account would be good but I'm not so sure now!

ACG

It sounds like its worth looking into. It could be ideal for you.
Im not advising you take one out, but its certainly an option. You might be better getting a broker on it, they can see which is likely to be financially the better. It mght just be a case of finding a repayment that allows large overpayments instead but its worth checking out the options.

sjl1970

Thanks ACG, we will definitely seek the advice of an advisor when the time comes. Talking to hubby this evening and we're exploring all options. Do we offset on an interest only basis and then increase our savings each month to increase the offset, and then use the savings to repay the capital, or do we plough any monthly excess into overpaying a repayment mortgage and repaying the mortage early? I remember when the choice used to be repayment or endowment over 20 or 25 years and that was it, it's a minefield now!!!

I have a feeling that whatever we choose I will get very anal about tracking how the mortgage and savings are performing!!!

ACG

You could, but thats what an advisor is for.

We have software that allows us to source pretty much every deal on the market within 2 minutes.

Thrugelmir

sjl1970 wrote: »

I remember when the choice used to be repayment or endowment over 20 or 25 years and that was it, it's a minefield now!!!

At the current time over 96% of new mortgage advances are made on a repayment basis.

For both lender and borrower alike the advantages outweigh the disadvantages. ( I should add the caveat the majority of borrowers)

sjl1970

ACG wrote: »

You could, but thats what an advisor is for.

We have software that allows us to source pretty much every deal on the market within 2 minutes.

Absolutely and that's what I'd pay an advisor for, what I'm talking about is me tracking (for example) my monthly overpayments after my advisor has found me a good deal. I'm a project manager by trade and am very much into the detail of financial tracking at work but as yet have to apply that philosophy to my personal finances, well that's all going to change next time around, plus I'm 41 and hubby is 48 and we don't want to be saddled with a mortgage debt whilst we are in our 60s and looking at retirement - the whole point of us moving location is to find a forever home and to own it outright as quickly and efficiently as possible.