Offset LTV

Slickster

In the fairly near future we'll be looking to remortgage, coming off a terribly high 5-year fixed rate :cool:

I'm quite liking the look of offset mortgages, as we've some savings (currently in an ISA).

A specific question about the LTV percentage.

If for arguments sake the house is valued at 100k with an outstanding balance of 75k, then that's obviously a 75% LTV rate. However, if in the offset product there is 10k of savings being used, would that mean 65% LTV products can be considered, or is that not quite how it works?

Are there currently any good recommendations for offsets, other than First Direct and YBS?

happycamel_2

LTV is equity versus mortgage value. The savings just reduce the interest on part of the borrowings to 0%.

Offsets can be great, I'm moving to one myself, but be aware that should you need some of the money you'll have the double whammy of depleted savings and a higher mortgage payment. Having said that, if you're canny with your direct debit dates you can transfer your salary in to the offset then move it back to your current account the day before your direct debits hit and save a bit of interest every month.

dimbo61

I think Barclays do offset mortgages which allow cash ISA,s savings to be offset

kingstreet

The loan to value of an offset product is how much you are actually borrowing. As you have no contractual obligation to keep any savings in an account with the lender, it has to assume a nil savings balance at the outset.

Slickster

kingstreet wrote: »

The loan to value of an offset product is how much you are actually borrowing. As you have no contractual obligation to keep any savings in an account with the lender, it has to assume a nil savings balance at the outset.

That's very clear, thanks. I think our situation would mean it would likely be helpful to use the savings to bring it down to the 65% at the outset, to get the better rates - only difficulty might be working out exactly what the remortgage valuation would be - would it be helpful to get some estate agents round to value the property?

kingstreet

Estate agents?

About as much use as the proverbial when valuing for a mortgage. Look at sales of comparable properties in the last few months and try to get a steer from that.

If you stay close to them and don't go OTT, the surveyor is more likely to agree with your estimate. After all, that's really all they do, agree or disagree with what you put on the form.

Slickster

kingstreet wrote: »

Look at sales of comparable properties in the last few months and try to get a steer from that.

Interestingly on our 100ish house 'estate' only 2 similar properties have sold in the last 5 years (both 3 years ago) as it seems people are happy to stay around here and/or houses are let out, so haven't been re-sold. It obviously becomes slightly less good to compare with equivalent properties a few miles away, but that may be the only option.

Jimbo1976

As kingstreet has suggested it is wise to be wary of solely relying on estate agents figures but if there are not many comparable property sales locally then may not have much choice. The property portals do give local house price trends so it may be possible to look at the changes in value of local properties and then apply this to the properties which sold 3 years ago.

Get 3-4 local agents round, choose on the basis of for sale boards near you (especially ones which say Sold). Take an average of what they tell you it will sell for then reduce by at least 10%. Compare this with you you worked out from sold values.

harvey115

I think some people miss that they can move their direct debit to their Offset Current account with the lender as well. So as soon as you have your salary just move it over to your offset account. The direct debits will keep on rolling from their when the time comes and no need to to do the last minutes transfers.

Having an ISA offset is better than normal savings because after the mortgage is paid off you are still left with tax free savings with a built up amount. Its like double savings...