Offsetting vs Overpayments

TeddyT_2

Now I have been considering my options with the other thread and have been reading up on both.

I currently have an agreement in principle with theoneaccount but I am now having second thoughts.

Basically what I was looking for was the flexibility which theoneaccount gave me, but now reading more into other methods it seems that overpayments will work for me even better!

My circumstances:

I will have some large savings which i was going to use as a deposit and then use some to offset my mortgage. However now I'm wondering why I'm bothering with offsetting when I can just put that lump sum into a bigger deposit and each month make overly big overpayments (£1000 on top of mortgage payments)

Now does this cry out to people that I should really be going for a flexible mortgage? (Any more recommendations welcome again) Also I am a graduate so any mortgages that may be in my favour here too would be helpful.

Any advice most welcome.

Cheers

MarkyMarkD

If all you are going to do is make lump sum overpayments, then there's no benefit in having an offset instead of over-paying on a flexible mortgage.

In fact, it doesn't even need to be that flexible as long as it allows penalty-free overpayments; you only need full flexibility if you actually want to get some of the money out again.

Have a look at the rates you can get on an "ordinary" flexible mortgage and compare to your oneaccount "in principle" offer.

TeddyT_2

Cheers. Is there some sort of comparitive list of mortgages out there that dont have penalty charges for overpayments.
Just get confused with all the rates they offer for flexible and normal mortgages.

MarkyMarkD

It depends on how much you want to overpay. Many allow limited overpayments (maybe 10% of the opening balance, each year) whilst others allow unlimited ones.

The FSA comparative tables at https://www.fsa.gov.uk/tables show (on the third tab, once you've entered the details of your mortgage amounts) the flexible features as "Yes" or "No" and you can then click through to see what they mean by flexible.

The Moneyfacts search engine at http://www.moneyfacts.co.uk/searches/mortgage.aspx is generally pretty good, but if you check "flexible" in your requirements, it excludes (for example) mortgages which allow you to overpay 10% of the balance. Presumably "flexible" for them means over AND under payments, etc (which is a fair enough definition, it just doesn't make it easy to compare if all you want to do is overpay).