First Direct Mortgage Overpayments then withdraw at a later stage

andybirch

Hi,

I'm in the process of purchasing a house with completion being mid August hopefully. There should be around £10k surplus from the sale/purchase which i'd planned on using towards a kitchen extension/refurb in a couple of years time.

Does anyone know how easy it would be for me to pay this money and further smaller payments over time, on to my mortgage account, then withdraw it when I want to do the work on the house?

I've opted for the 2.79% lifetime tracker which has no penalties for overpayments. Is it just a case therefore of asking for some or all of my overpayment back?

Cheers,


Andy.

Thrugelmir

Mortgages don't have facilities to withdraw overpayments, unless the nature of the product specifically states so.

You'll need to apply for a further advance if you wish to withdraw the overpayments as a lump sum.

Goldiegirl

Thrugelmir wrote: »

Mortgages don't have facilities to withdraw overpayments, unless the nature of the product specifically states so.

You'll need to apply for a further advance if you wish to withdraw the overpayments as a lump sum.

Agreed, money should only be paid into a mortgage if you don't want to use it for any other purposes - it's not a savings account

TrickyDicky101

Goldiegirl wrote: »

Agreed, money should only be paid into a mortgage if you don't want to use it for any other purposes - it's not a savings account

I don't see why it's so wrong if the mortgage allows one to withdraw money paid in as the need arises. It's just one more aspect of managing one's finances.

Pedent

I have an interest-only offset mortgage with First Direct, and have made overpayments and then borrowed them back on a couple of occasions (never as much as £10k though), just by doing a transfer using online banking.

It's possible that your mortgage product would work differently, of course, but I think there's a good chance that you'll be able to do the same.

From_St_Neots

As Pendent says, have you considered an offset mortgage? Although I am confused by the overpayment comment. I thought offset was you held money in a savings account linked to the mortgage. In your case £10K and then this balance will ensure that you are not charged interest on £10K of your mortgage balance.

When you then withdraw the £10K to do your kitchen then the interest on your mortgage goes up to reflect the lower offset balance sitting in the savings account.

I don't know a lot about offsets but aren't the interest rates a bit higher than other packages so a bit of shopping around may be necessary to ensure you get the right deal for you.

nyck

Ive also got a Mortgage with First direct
When i first joined we had 3 accounts all linked/offset
1)Mortage acc
2)Current account
3)Savings Acc

If i was in your situation i would be putting the 10k in the Savings as it offsets against the mortage

Thrugelmir

From_St_Neots wrote: »

I don't know a lot about offsets but aren't the interest rates a bit higher than other packages so a bit of shopping around may be necessary to ensure you get the right deal for you.

Interest rates on offset products are often marginally higher. As this covers the administration cost aspect of being granted the facility.

andybirch

Hi, thanks for the replies.

initially did think i'd be able to offset my savings account, but was told this was not possible. Also I didn't meet the stricter criteria in place for FD offset mortgages.

I guess I was wanting too much, asking for a financial product which actually benefitted the customer.

My only option now is to try and maximise the rate I can get through a savings account and remember to move it around when the rate drops.

Happy tarting.

stylus360

Goldiegirl wrote: »

Agreed, money should only be paid into a mortgage if you don't want to use it for any other purposes - it's not a savings account

Why ?

I do this on my Nationwide mortgage (they have now stopped the facility on all mortgages to borrow back overpayments)

If the % rate is higher then any interest rate you can get then it makes sense.

sebtomato

Thrugelmir wrote: »

Interest rates on offset products are often marginally higher. As this covers the administration cost aspect of being granted the facility.

Not sure that's necessarily the case.

I am with First Direct, and got my offset mortgage two years ago for a £99 fee and a tracker rate of 2.49% (1.99%+BR).

If people want the flexibility to overpay and then withdraw the money, then an offset mortgage is the solution.