Offset Mortgages -- the Numbers

JayS_3

gmgohara wrote:

Sorry, not sure what you mean ???

I am new here.

Are you able to respond to my original question ??

Regards

edited

together with some chat about the merits and demerits of off-set mortgages, be sure it's suitable for your circumstances before you decide on one.

HTH

You will also find London & Country at: http://www.lcplc.co.uk/

RICH2002

just changed my mortgage from alliance & leicester (2year discount finished )
and rate was due to go to 6%+++
finally decided on Yorkshire building society Offset mortgage
Full term tracker mortgage at .75 above bank of england base rate (4.75 currently) so i am charged at 5.50%.
I paid no fees to move it as i did it through the net.
I paid no admin fees absolutely nothing
And they were very fast to process it through their solicitors that it was completed only three (3) days after my discount period ended so i paid no penalties for finishing it during the early redemption period. This mortgage has no tie ins whatsoever so i can move it whenever i like.
The thing about offset/flexible mortgages i found was that they all offered some good benefits but only a few offer all the good benefits.
e.g
the one accounts interest rate is determined by how much you wish to borrow in relation to the value of the property ie 90% of the properties value is charged at 6%++.
Eggs mortgage is a very good rate but they do not give you a current account tied to it so you can't get the benefit of your salary and the savings account that comes with it does not allow direct debits.

I searched most of the offset/flexible mortgages around before settling for Yorkshire building society as it gives me everything i want. I get three savings accounts tied to the mortgage so i can track my wages, the wifes wages and the third for savings. all the accounts have a link cash card and allow direct debits and standing orders. The interest is calculated daily and i can overpay/underpay. you can also ask for further funds if required for home improvements but in my eyes this kind of defeats the idea of an offset mortgage ( paying your mortgage of early)
I currently have some money put aside for an extension and this is now offset against my mortgage. I also get overtime frequently so i believe this is the best mortgage for me at this time. all my funds go to the account and i save interest on all of it until i withdraw some funds or my direct debits are taken out.
one other point is i did a suoer balance transfer on a credit card and the funds are also in the offset account saving me money as i pay 0% on it and keep switching it
But i will obviously review the situation on a regular basis
I just love using and abusing the banks and i think this site is the best thing since sliced bread.

madeinengland

I'm with Rich-I have spent this weekend doing the figures and my main finding is the reduction of time spent paying back the mortgage and the final total amount paid to the bank.By simply keeping switching after 2years I seem to be maintaining a low monthly payment but extending the period.This plays into the banks hands surely,with the total interest being significantly higher due to the way discount and fixed rates allow you to pay.I feel that you have more control with the offset and a greater desire to reduce the loan quickly.
No science just based on human nature.
regards

Tharweb

RICH2002 wrote:

I get three savings accounts tied to the mortgage so i can track my wages, the wifes wages and the third for savings. all the accounts have a link cash card and allow direct debits and standing orders. The interest is calculated daily and i can overpay/underpay.

Interesting. I have had a mortgage with YBS for a few years and when my latest deal ended, I also went for the Offset. Like you, as it didn't cost anything to set up, I thought it would do until a better deal came along.

I didn't realise you could do what you are doing, ie. treating it like a current acount mortgage. At the moment I am still having salaries etc. paid into my high street bank and transferring the excess into the Offset. It really bugs me that I get no interest on my existing current account but I haven't the guts to change it. I might now consider moving the DD's over one by one and gradually convert.

KTF

This might have been asked already but does anyone have the original formulas in Excel format as I am having trouble following the calculations.

Spikey_2

Any advice appreciated.

http://forums.moneysavingexpert.com/showthread.html?t=63393

Cheers
Spikey

bowf

I'm totally lost here...
I need some basic advice.
We have a £145K mortgage on a property valued at £190K
It's split between £63K on endowment and the rest on repayment.
We're currently paying around £780 per month over 20 years.
We rarely have any salary left over at the end of the month but we do have £20K sitting in a savings account,which doesn't earn us very much at all.
If we were to use that £20K as part of an offset mortgage deal,what sorts of savings (if any) would we expect to see ??

kittymott

Hi
I am 55, my husband is 64. Our mortgage is £31,000 balance. I have £18,000 cash in two bank accounts and £17,00 available from my uncle on loan indefinitely. We currently have an endowment mortgage which has 9 years to run. Should I change to an offset and with whom. I live in N. I.
Thank you for your help.

Walletwatch

kittymott wrote:

Hi
I am 55, my husband is 64. Our mortgage is £31,000 balance. I have £18,000 cash in two bank accounts and £17,00 available from my uncle on loan indefinitely. We currently have an endowment mortgage which has 9 years to run. Should I change to an offset and with whom. I live in N. I.
Thank you for your help.

Kitty

A couple of points here - not sure you'll get a good deal on an offset mortgage for a loan amount as less as £31000. For that matter, I am not even sure any bank will want to advance such a small amount.

Secondly, if you know that you definitely can do without the £18000 cash (or part of it for that matter), it may make more sense prepaying that amount if your current mortgage allows it.

supermum1958

Can find no reference to Abbey's offset, which seems OK. For a slightly higher upfront fee (I think, without checking, £395??) the interest rate is 0.5% above base, APR 5.4%. This is lower than the general offerings elsewhere which seem to be around 0.75% above base.

True, it doesn't link to a current account, only a savings account, but it's pretty easy to transfer in and out. Is anyone else a fan? Any probs or anything to watch out for?