Offset vs overpayment for future house move?

FlashBarry

We have a house worth about £100k and our Mortgage balanceis 85k.

I am looking to invest about £2600 a month into the mortgage(basic payment is £460), either as over payments or into the offset. We are aiming to clear the mortgage in 3years.

After 3 years, we will be looking to move into a biggerhouse, probably about £200k.

Regarding the house move, would we be better off to have thecash in the offset? Does this put us ina better position than clearing the mortgage and having £100k equity in a houseowned outright?

If in 3 years we end up with £80k still owing on themortgage but 80k in savings in the Offset, does that mean we could buy a houseof £160 straight away without having to renegotiate a new mortgage?

Any advice or suggestions greatly appreciated.

getmore4less

Keep the money offset, gives the most options when you come to move.

Mortgage needs to be portable

FlashBarry

getmore4less wrote: »

Keep the money offset, gives the most options when you come to move.

Mortgage needs to be portable

Thanks for the comment.

So Mortgage + Offset IS better than equity in a house?

If we had to negotiate a new mortgage, I don't think I will get a deal like the one we have now! (0.8% above BOE base rate!)

If we overpaid until we only owe £10k, would my current lender be happy to extend to £100k extra on the same mortgage terms?

jackomdj

Who is your mortgage with? My C&G at a similar rate was fully portable and they upped the mortgage at the same rate as it was all part of the original deal.

getmore4less

FlashBarry wrote: »

So Mortgage + Offset IS better than equity in a house?

Converting offset savings to equity is easy you jist overpay.

convering equity to savings/mortgage may not be.

Zero_Sum

it could be worth while over paying by a few grand to bring the LTV down, so you can get a better rate, as my mortgage is a similar amount at nearly £100 pcm less

FlashBarry

Zero_Sum wrote: »

it could be worth while over paying by a few grand to bring the LTV down, so you can get a better rate, as my mortgage is a similar amount at nearly £100 pcm less

You have a better rate than 1.3% ?!?

I thought the main difference here is the number of years. (i.e. you might have 25/30 years to pay it back, but I have 19 years to pay?) Therefore, they would need less money from you each month?

dimbo61

The mortgage lender will look at the LTV when you want to port your current deal!!!
If you are paying such a low mortgage rate then you should be filling cash ISA,s and regular savers ( First Direct)
We have had an offset mortgage for a couple of years and we normally keep about £16K in the offset ( think benefits if you lose your job)
We overpaid the rest BUT our mortgage rate was more than we could get in savings,
So make sure you use Cash ISA,s first then regular savers and then money in the Offset

Zero_Sum

FlashBarry wrote: »

You have a better rate than 1.3% ?!?

I thought the main difference here is the number of years. (i.e. you might have 25/30 years to pay it back, but I have 19 years to pay?) Therefore, they would need less money from you each month?

TBH, with it being £85k on a £100k property, just assumed it was a 90% mortgage taken in the last 3 or 4 years over the usual 25/30 years.

and if your rate is only 1.3%, why would you want to overpay. You can get better rates on savings accounts

getmore4less

dimbo61 wrote: »

The mortgage lender will look at the LTV when you want to port your current deal!!!

With oiffset/saving you can adjust LTV at the time you need to.

Morgage_Confused

What are the chances of a port on that kind of rate though?