Mortgage payments

southend

Hiya, i am sorry to bother you but we are confused and a little worried if any mistakes have been made.
We bought our house from the housing association under the right to buy scheme.
We took out a mortgage with the Woolwich for 71,000 fixed for 10 years on Febuary 17th 2007 for a 20year mortgage. The 1st ten years at 4.98%They call it an Open plan and to get it we were told that we had to open another account as part of the conditions. The term is 20 years
Concerns:
We pay £467.78 a month, interest paid daily until 31st Jan 2017 ( 117 payments). After that the rate will change.
As of today we owe £59,355.76. This figure is not the same as on Martins page. I was also told that an early repayment as of today would be 6% £3561.34 and a admin fee of 275.00. I was also told that at the end of the 10 years there would be £31,000
owing assuming that no overpayments has been made.
Letter says 117 payments of £467.78
123 payments at a variable rate, currently 5.95% £489.46. confused. APR 5.5% for comparison. do you know if this is a good rate or could it be worth switching for another fixed rate. We have very little spare cash though. We cannot make an overpayments on the phone but can make mortgage payment - daft
Could you tellme if there could be an error in these figures as my husband will be 68 when the mortgage gets paid off. We don't want a shock.
Many thanks

mgdavid

A Woolwich Openplan mortgage is an Offset arrangement where you nominate other Barclays accounts (current, savings etc) and any credit in them is offset against the mortgage debt on a day-by-day basis to reduce the interest owing. Given that no-one knows in advance what the accumulated offset 'savings' will be, when the time comes to change interest rate and recalculate the monthly payments the numbers will be a bit different from what's expected. Not sure if this is what you are asking about!

southend

We was not informed about this - nominated account etc We were told that we were told that if we needed to borrow money we could do so at the same interest rate. We was told that we could put money in that account and no interest would be paid on any money we had in there. Hence we decided not to put money in this account, not even for the mortgage to be withdrawn from. It is sitting there doing nothing.
When you say 'any credit in them is offset against the mortgage debt on a day-by-day basis to reduce the interest owing'. Would that for example be i have 50.00 left in my account, Barclays would keep that until mortgage renewal or would it be just the interest from that or another said account?
Sorry, very new at this and to be honest i do not know anything about mortgages. I suppose i was wanting to know if they had so far done their sums right and now that you have said that what could we look to do in future to benefit us financially, ie use it to our full advantage with the mortgage for example pay it off a bit earlier, borrow less when this first term ends. Any suggestions would be grateful, even ideas what you would do if it was yours. I think it might be a number of questions really.

HAMISH_MCTAVISH

southend wrote: »

When you say 'any credit in them is offset against the mortgage debt on a day-by-day basis to reduce the interest owing'. Would that for example be i have 50.00 left in my account, Barclays would keep that until mortgage renewal or would it be just the interest from that or another said account?.

From my limited understanding of them, offset mortgages involve reducing the mortgage amount you are charged interest on, without actually permanently reducing the balance of the mortgage.

They're a bit of a niche product, and someone will be along soon who understands them better I'm sure, but I think it works something like this.

Lets say the mortgage amount owing is £100,000.

In the nominated account on the 1st of the month you have your pay deposited of £2000, and nothing is withdrawn.

For that day, the 1st of the month, you are only charged interest on £98,000 instead of the full £100,000.

Over the course of the month you withdraw money from the offset account, so the balance used to calculate interest changes daily.

So on the second, you have £1800 in the account, and are charged interest on a mortgage balance of £98,200. On the third day you have a balance of £1500, and are charged interest on £98,500. etc etc etc

It's fairly complicated, but over the term of a mortgage it can reduce the amount of interest paid. But only if you keep other money flowing through that account.