Offset mortgage vs 2.79% 5yr fix?

dimbo61

I have an offset mortgage with the YBS which is now on a reasonable follow on rate so we like offset mortgages.
Having said that the 5 year fix from the COOP at 2.79% is a very good deal and if you can overpay by 10% a year all the better to reduce your mortgage debt.
Keep you savings in Cash ISA,s hopefully getting 3% for emergencies and enjoy the security of a long term fix and the chance to reduce your debts.
If you do nothing more than move to the COOP deal but keep your mortgage payment the same you will knock a year or two off the term and save a couple of thousand pounds.

sebtomato

marathonic wrote: »

If I were to guess, I'd say a person in the OP's position is likely to be in a professional job, probably with a good income protection plan in the benefits package. If this is the case, life insurance and about 6 months worth of outgoings would be sufficient cash for any family.

I can only assume that someone with a £330K home would have a large income (probably £70K - £100K per year), and therefore the outgoings that comes with it.
£20K cash savings on an income of £100K per year for instance is not that great: after tax, that's the equivalent of less than 4 months of net salary.
In term of income protection, very few people have insurance for redundancy, and that's one of the main risks currently. If you are on a high salary, it can take a while to get something equivalent, and very hard to get a job paying a lot less (even if you try).

I guess my point was that the OP thinks he has some high level of cash savings, but it may not be actually that high when all considered (including bills and maintenance of such house)...

Gambler

michaels wrote: »

I keep asking FD if they have any plans to offer an offset fix of more than 3 years and they say they can not tell me...

My 5 year fix with FD ends in May. I really don't want to move but the fact they no longer do a 5yr fix means I may have to.

getmore4less

sebtomato wrote: »

I can only assume that someone with a £330K home would have a large income (probably £70K - £100K per year), and therefore the outgoings that comes with it. .

Why on earth would you assume that?

sebtomato

getmore4less wrote: »

Why on earth would you assume that?

Mortgage lending multiples?

notanewuser

sebtomato wrote: »

Mortgage lending multiples?

Mortgage is £130k.

House may have been bought 20 years ago for £150k.

sebtomato

notanewuser wrote: »

Mortgage is £130k.

House may have been bought 20 years ago for £150k.

Mortgage outstanding is £130K, on a property of £330K. Yes, it could have been bought 20 years ago (with an income of £50k at that time, corrected from inflation), or 3 years ago.

bigadaj

sebtomato wrote: »

Mortgage outstanding is £130K, on a property of £330K. Yes, it could have been bought 20 years ago (with an income of £50k at that time, corrected from inflation), or 3 years ago.

Or forty years ago, for twenty grand or less.

notanewuser

Or they may have made a lot of money on a previous property/ies (or had another windfall such as an inheritance).

getmore4less

sebtomato wrote: »

Mortgage outstanding is £130K, on a property of £330K. Yes, it could have been bought 20 years ago (with an income of £50k at that time, corrected from inflation), or 3 years ago.

What it cost when is irrelivent, as is the current house value

it is just down to the current £130k mortgage when it come to multiples.

4* £32.5k
3* £43.4k

Even if the mortgage was bigger a few years back the salary requirements would never get to your numbers even if you projected back the value of a £330k house now to when a 100% loan would be £130k now