Lifetime tracker offsets

tohlw

Hi all,

Looking for advice on a mortgage.

I'm buying a house, and I'm looking for a lifetime tracker offset mortgage. (having done my sums, I'm pretty sure an offset mortgage is worth it for me.)

I'm at 75% LTV (and I could manage 70% LTV at a pinch if I throw all my savings into the pot).

Currently I'm looking at:

Santander's lifetime tracker at BR+3.09%
Hinckley & Rugby BS at BR+3.19%

My wife's got a good credit history with Santander, which might make it marginally easier to get a mortgage approved with them; I quite like the idea of having a mortgage with a small building society rather than a large bank.

I guess I'd like to know
* Are there any other cheap lifetime tracker offsets I should be looking at?
* Are there any reasons I should avoid either Santander or HRBS?

Thanks.

sebtomato

First Direct?

tohlw

Sorry, should have specified - I want a repayment mortgage; as far as I can see FD only offer interest-only on offset.

1StepDebt

Why choose an offset when you say that, if you throw ALL your savings at it, you'd only reduce the LTV by 5%?

I thought the purpose of an offset was to allow you to use your savings to offset your mortgage against and you'd only be charged interest on the difference.

With under 5% of the value of the house in savings, I doubt the increased rate on an offset product would be worth it and you'd probably be better going for a standard, repayment lifetime tracker.

Offsets make most sense if you have significant savings - think along the lines of someone who has about 30% of the value of their house saved towards their childrens college education in a few years time. In this case, you'd want the bank to be contractually obliged to lend you the money and might go for an offset product to reduce your interest to a minimum. This may be more desirable than having to risk being turned down for equity release in 3-5 years.

tohlw

Honestly, I have done the sums.

After four years of having very small savings, last year I sold my company, and now earn approx £100k.

I've earned that 25%/30% deposit over the course of the last 12 months living fairly frugally; and I ought to be able to save about 10% of the value of the house every year going forwards.

marathonic

I'm completing on a house this week and am also at the 75% LTV.

My choice in mortgage's was limited due to personal circumstances - circumstances that will no longer apply in a year or two.

I went for a 2-year discounted rate. My plan is to save as hard as possible during the 2-year period and remortgage at that point.

If I save well and the price of the house rises slightly, there is a high likelihood that I'll be able to remortgage to a 60% LTV lifetime tracker at that point.

From there on in, the only time I'd need to remortgage is if the margins above base rate for tracker mortgages reduce significantly enough to make it worth my while.

marathonic

tohlw wrote: »

Honestly, I have done the sums.

After four years of having very small savings, last year I sold my company, and now earn approx £100k.

I've earned that 25%/30% deposit over the course of the last 12 months living fairly frugally; and I ought to be able to save about 10% of the value of the house every year going forwards.

So why not just use the savings to overpay a standard tracker mortgage? The only real reason I see for an offset mortgage is if you have a real need for the money in a few years and fear that you'd be unable to release the equity from your house at that point.

At 70-75% LTV, I'd seriously consider applying for a standard, fee-free tracker. With the above figures, you could pay it down to 60% LTV in a year and could then apply for your desired 'lifetime' mortgage.

You should probably see a broker as they'll explain this better than I ever could.

tohlw

Thanks - I understand fine, and it's a reasonable position; I'll bear it in mind. A complicating factor here is a first baby arriving in 3 months time; I'm not entirely sure of the financial impact(!) and so I'm loath to tie my hands too tightly.

getmore4less

tohlw wrote: »

Sorry, should have specified - I want a repayment mortgage; as far as I can see FD only offer interest-only on offset.

Makes no difference,

you can run a FD as repayment if you want,

BUT why would you not just offset same result in the end.

Unless you have variable income or cashflow needs, a lower cost tracker will save moew money.

The flexability of an offset is worth quite a it to those that need it at the expense of a higher rate.


Santander are the lovechild of the devil, farr too many issues reported,

Allthough once set up an offset should be no problem.