Offset or 2 year fixed

Red_Elle

Our mortgage fixed term ends in October this year and I'm trying to decide which mortgage to get next. Have always used the same IFA, but recently asked him and the mortgages that he came back with were a lot higher rate wise than the ones that I could find myself, so I've lost confidence in him.

Our current situation is that I am about to go on maternity. Not sure how long for, but have £60k from my business, along with my Husband's wage if I want to take a few years out for family.

No point leaving this in the business account doing nothing and personal savings rate are not good at the moment, so wondering if I should opt for an offset mortgage, but have never had one.

We will need some of that money - probably £10k-£15k pa - so can i just access that whenever I want?

The other option is to get a 2 year fixed rate and carry on overpaying the mortgage. The best rate, last time I looked, was 1.99% with Chelsea but with quite a high fee. Think YBS has a slightly higher rate, but a lower fee.

The house is valued at £150k and the current mortgage is £90k. We overpay a lot, so by October could get it down to £85k. The other option is to then pay another £25k off it, taking it to £60k, so that we have more money on a monthly basis anyway and therefore don't need as much of a 'pot' to dip into. However, I'm not sure I'm comfortable not having access to the £60k with it having paid off some of the mortgage, which is why I'm thinking of offset.

Hope that is clear. Any advice greatly appreciated.

bigadaj

You'll pay a higher rate for an offset normally but then have the flexibility to draw on the money as you need.

We assume that the multiplier of your partners salary is fine for your current mortgage so its just a balance between flexibility and cost.

I think moderation is often good so would be tempted to pay a lump sum off and then get a low fix or tracker rate whilst retaining some capital but its all opinion.

Red_Elle

I was starting to come round to that thinking too. Was thinking about taking it down to around the £60k mark. We've got some shares that we'll access next November for another £25k or so, so can pay more off then.
Thanks for your thoughts.

mbailey

Having been looking around myself, it is possible to get a fixed rate offset, that way you have the flexibility of the offset with the gauranteed rate.

Yes the rates are slightly higher, but if you shop around you can find some offset fixed rates which are close to the standard fixed rate deals.

A useful tool I have been using recently is this one:
https://www.google.co.uk/compare/mortgage/qs

getmore4less

If offsetting loads then the rate is less of an issue and the margins are quite low these days.

Access to cash for cash flow can be very valuable especialy if you have a business and kids.

You also can withdraw for other investements if you find something.

dimbo61

My vote is for an offset mortgage
Now the difference in rates between an 5 year fixed rate deal and a 5 year fixed rate offset with YBS is 0.1%
You have the money in the offset to draw on when needed and offsetting when not.
We keep all our emergency savings in the offset and have used " Friends and Family" as well.
Great way to get Mortgage Free early as you can overpay or build up savings in the offset to clear the mortgage at the end of the fix