Offset Mortgages -- the Numbers

jamesd

patp, those numbers look reasonably accurate. You should do something cleverer with the savings but that would just make the non-offset option look even better.

WIth 180 payments stocks and shares ISA is one useful option if you can stand the ups and downs and pick a range of funds in different sectors. Then you can start switching the money to more conservative choices gradually in the last five years so a market drop then won't get in the way of repaying.

patp

jamesd wrote: »

patp, those numbers look reasonably accurate. You should do something cleverer with the savings but that would just make the non-offset option look even better.

WIth 180 payments stocks and shares ISA is one useful option if you can stand the ups and downs and pick a range of funds in different sectors. Then you can start switching the money to more conservative choices gradually in the last five years so a market drop then won't get in the way of repaying.

Thanks for the sanity check! One of the things I liked about wanting an offset was that it limited the choices, now I have to search for a new mortgage and we all know how much fun that isn't. Recommend any good search engines? I'm after a no-ties deal with flexibility, so I think the best option will be a tracker. I'd go for a discounted tracker but as they all seem to be setting high admin fees to reduce churn, it's probably best to go sor something I'm happy to stick with for term. The Woolwich one is nice cos there are absolutely no fees involved; however they have a reserve facility that charges at their variable rate so it would be nice to find one that allows extra borrowing at the product rate.

ptee

thanks jamesd, The egg calculator again is good but my problem is my savings are coming in lumps throughout the year aswell as monthly overpayments starting in 2009. Im banking on paying my mortgage off within 10yrs and within those 10yrs my savings will come in approx 28 lump sums. The egg calculator only allows you to add 2 lump sums!

you any good with excel? If i sent you a copy of my spreadsheet you could have a look and see where i've gone wrong. ;O)


I think maybe i should just go see a mortgage advisor.

pinkparrott

Hi , I'm not sure if this is the best place to post this but, i dont think our ofset mortage is working at all and think we would be better off switching, but my husband want to stick with it. Any opinions ?
Our situation :
value of house £285K, outstanding mortgage £47K , we currently have a virgin one account , whilst i was on maternity leave we regularly overspent, however now i'm back earning things have got a lot better, but we still find it so easy to overspend , most months we are just paying the interest and not really leaving anything in at the end of the month.

I think we would be better just with a nornal current account and seperate mortgage, as we could make sure we repay and if there is any money left then over pay, also i'm not 100% sure of the rate we currently have but think we could get better due to the LTV we would need.

Any thoughts?

jamesd

pinkparrot, you're probably paying at least an extra 500 a year in interest for the One Account compared to a normal offset mortgage so switching to one - even an offset mortgage - with a lower interest rate is definitely an option to consider.

You should phone the One Account people to check your current rate. One of the features of the account is the option to have a larger loan facility than your outstanding balance and the interest rate is set by the LTV of the loan facility, even if you're not using it. Reducing the amount you can borrow may reduce the interest rate a bit. Still not enough to make it competitive, but it's fast and easy to do as a start.

There is also a One Account offset mortgage available, which works more like a normal offset mortgage than their current account mortgage. It's worth finding out how much it would cost to transfer to it compared to a deal with another lender. Don't be rushed into it though, since it is likely that another lender will offer a better deal.

I suggest that you consider a lifetime Bank of England tracker mortgage, offset or not. Lifetime BoE tracker because your mortgage value is now fairly low and the costs of remortgaging are starting to become significant, so a tracker variable rate that adjusts automatically for the remainder of your mortgage can save that switching cost.

Tesco_points_addict

Currently got a Woolwich offset for 100,000 have about 20,000 in savings (but may well be using this on an extension in the next couple of years) Took mortgage out when we moved in May 06 over 20 years. Would we be better off elsewhere?
House value approx 190k
We always over pay

MarkyMarkD

It depends why you have the savings.

If you are never going to want them back, you are almost definitely not in the right mortgage as you could probably have a straightforward flexible arrangement with a lower rate.

If you put the savings in and out all the time, it might be worth having the benefits of the offset.

Tesco_points_addict

MarkyMarkD wrote: »

It depends why you have the savings.

If you are never going to want them back, you are almost definitely not in the right mortgage as you could probably have a straightforward flexible arrangement with a lower rate.

If you put the savings in and out all the time, it might be worth having the benefits of the offset.

Ok, husband and I have had a chat(!) we would love to be mortgage free ASAP (wouldn't everyone!) At the moment our repayments are approx. £680 although soon to go up with interest rate change. We could afford to pay £1,000 a month at the moment (but would not really like to commit ourselves to this long term, just in case, you never know whats round the corner!)

Would we be better off asking Woolwich to take £1,000 per month or just add the difference to one of our offset accounts (we would not need to claw back the overpayments at any time - but may not always be able to make the £1,000)
Any advice would be graefully received

Thank you

MarkyMarkD

I think you should at the very least consider remortgaging to a non-offset deal, but one which allows limitless overpayments.

Is your current Woolwich deal a tracker or fixed rate?

Tesco_points_addict

MarkyMarkD wrote: »

I think you should at the very least consider remortgaging to a non-offset deal, but one which allows limitless overpayments.

Is your current Woolwich deal a tracker or fixed rate?

Its a tracker, opened 1 year ago