First Direct Offset Mortgage

missymouse

we have finally finished our 5 year fix but want to stay with FD as the offset is easy etc. we owe around 70K

would you go for a 2 year or 3 year fix. we plan to overpay. we only have 3 years left on our mortgage.

rates 2 year - 2.79 - £499 fee

- 3.09 - no fee

or 3 year - 2.99 - £499

there are other choices SVR is 3.79. any thoughts thanks. my gut feeling is to do the 3 year if you are going to pay any fees.

also closure fee on the ones with booking fees. what is that about

dtsazza

I would lean towards the three-year fix for the fee reason that you stated.

You save £140 a year in interest with the lower rate on the two-year, but are effectively paying £83 a year extra in fees (£250 - £167). As you pay down the balance the interest benefit will decrease while the fee difference stays the same.

And finally, while it's not clear to anyone what will happen in the future, it's almost impossible for rates to fall lower from here. So I think it's fair to say that any rate change is more likely to be upwards. And while I think a significant move in either direction is unlikely, there is some value in fixing low rates for an extra year.

All that said, I don't think there's a great amount of difference between either of the fixes, and you're unlikely to go wrong with each.

Gizmo247

stay with FD as the offset is easy

As a repayment on the 3 year 2.99% that is around £2000 pcm {GULP!}

Is that manageable? Do you have other savings to dump into the offset? If not you might be able to re-mortgage to a slightly longer term.

kingstreet

What savings do you have offsetting the negative mortgage balance?