Bit of help with options?

glasgowdan

Hi,

I am planning the mortgage potential pay-ff and have a couple of thoughts about how to do it and wonder what people might suggest as I am finding it a bit confusing.

Basically, my wife and I SHOULD be able to pay off the mortgage in 2 and a bit years. We have an offset mortgage as we have always been able to save a wee bit. Our current deal is due for renewal as of April 2013 and we will then agree to a final 2 year deal of some sort which should lead us up to paying it off somehow.

My question is really what's the best way to go about this? Come April we plan to put the savings account into the mortgage, leaving us with around 40% of the current mortgage value to pay off.

Now, would it be best to do this and take out a regular tracker/fixed rate on the remaining amount? (this would mean the monthly payments would be much lower than now) on, say, a 15 year term, save our money elsewhere and at the end of the 2 years put the savings into the balance to pay it off?

Or, would it be better to take out a new offset mortgage on the new balance and save that way?

I think the ultimate answer lies with what the total interest over the following 2 years would be (given that we should have the money to pay it off by the end of it regardless of how it is done) and go for the cheapest option, but am I missing something? Slashing the monthly payments means we would be able to save better than we currently do which will make it a bit easier to get there in the 2 years (april 2015).

I would appreciate any input, or if anyone has done this and feels they would like to share their experiences.

Thanks

Spiggle

Hi,

I haven't done this and don't have an offset!!! But the question came to my mind of do you know what your interest rate will be on your current offset after the deal ends in April 2013?

All the best,
Spigs

glasgowdan

I think the rate will be slightly more favourable than it is at present, but my thinking was that if we keep things as they are we will ultimately give the bank more money over the next 2 years which we can avoid by using the savings to slash the o/s balance instead.