Offset Mortgages -- the Numbers

ali99

Why is it better to keep your mortgage payment in your linked account until the end of the month and then pay it? Doesn't it give exactly the same benefit to pay it at the start of the month? I understand the theory for all other bills, of course it makes sense to pay them later in the month, but the mortgage payment, I can't work it out.
Thank you!
Ali

Locoblade

Hi Ali

Not sure if you're referring to my post or not but I didnt mention the mortgage payment

As you say, with an offset mortgage I don't think it actually matters when you paid the mortgage in the month, because as soon as the cash is in your account its effectively a payment against the mortgage, making the "payment" is in effect only a paper exercise moving it from one offset account to another. I think

triggers_2

Hi Everyone

Its my first post so be gentle!

First Direct have released a new 0.99% above BOE Base rate Offset tracker.
So what? Well there are no arrangement fees, setup fees, etc

Here is the link
http://www.firstdirect.com/mortgages/offset-base-rate-tracker.shtml

We are just coming to an end of a C&G fixed rate (4.45%) and are looking to move to an offset but we HATE the idea of paying any lender an arrangement fee - especially when they can be £1000 +. Plus we like the idea of an offset as we have TOISA and ISA maturing later this year.

Can anyone beat this? Is it too good to be true?

Plus to get given £100 when you setup a Current Account

Locoblade

I think you might actually get £200 if both you and your other half create a 1st account to link to the mortgage, but Im not certain on that.

Are there any early redemption fees on that, can't see anything mentioned?

MarkyMarkD

triggers

You are wrong to object to arrangement fees on principle. If your mortgage is sufficiently large, it will always pay you to pay a fee and to get a lower rate (if the lender offers a choice).

triggers_2

MarkyMarkD wrote: »

triggers

You are wrong to object to arrangement fees on principle. If your mortgage is sufficiently large, it will always pay you to pay a fee and to get a lower rate (if the lender offers a choice).

Hi Mark

My mortgage is small - LTV 20%, therefore paying anything approaching £1k-2k to set the mortgage up does have an impact as its around a 3% increase in the loan.

I can go for a lower setup fee - but the rates are higher.

I am free to object to fees on principle, therefore I cannot be "wrong".

MarkyMarkD

You are "wrong" to rule out consideration of all mortgages with fees, if your objective is moneysaving. Fees are not necessarily "bad". Saying you'll pay no fees on principle is "cutting off your nose to spite your face".

It's not the size of your LTV that is relevant, but the size of your mortgage.

But I agree that paying a fee of 3% is excessive in most cases and that you'll get better value on a low fee, or fee-free, product.

missymouse

the fees have shot up lately. Usually you are better off paying a smaller arrangement fee with a slightly higher interest rate on a small mortgage especially if you can overpay. with a huge mortgage the large arrangement fee is of benefit

MarkyMarkD

It's all about "horses for courses". As missy says, average fees have increased significantly and there are far more large fee products on offer, but the reason the lenders have done this is so they can keep the rates down lower to benefit those coming of low rates from 2 years ago.

There are far fewer fee free products, so ruling out everything else (when the total number of mortgages on the market has fallen significantly) is very restrictive.

Astonished_2

Locoblade wrote: »

Are there any early redemption fees on that, can't see anything mentioned?

Hi, that was my first thought too as I've been looking around for a better deal without any early redemption fees so I've rung up FD and checked and there are NO early redemption fees for the offset base rate tracker and it is completely fee free too for a limited time (think it is 31st Oct)