Offset Mortgages -- the Numbers

Locoblade

I believe FD charge interest a month in arrears, so July's interest doesn't get charged to you until August etc, with an offset mortgage though its not going to make any difference anyway, because as you say the money sits offsetting the loan amount until the day its paid off, so in effect you're just shifting money from one segment of your mortgage to the other. The only difference a payment will make is to show reduced capital, but that should make no difference to the actual interest calculations.

watchingthepennies_2

Thanks locoblade, thats what I thought, just wanted to make sure I wasn't missing something!

triggers_2

FD now have a new offer. Offset mortgage 0.75% above BOE base rate for life of mortgage. No setup/valuation/arrangement fees etc
See here http://www.firstdirect.com/mortgages/

MarkyMarkD

I believe that offer is remortgage only.

Locoblade

it's +0.79% but yep, they've also got +0.49% tracker for life with a £999 fee.

smckay

triggers wrote: »

FD now have a new offer. Offset mortgage 0.75% above BOE base rate for life of mortgage. No setup/valuation/arrangement fees etc
See here http://www.firstdirect.com/mortgages/

I am thinking about taking this mortgage. The deal is for the "life of the mortgage" does this mean that you could re mortgage at any time? Normally a deal is for a period (2, 3, 5 years etc) and then you can re mortgage but this offer on shows for the life of the mortgage?

MarkyMarkD

"Life of mortgage" means what it says. If you want to have the mortgage for 40 years, you can, even if you move house - because you can "port" the mortgage to a new property. If you want to redeem it at any earlier stage, you can too - because there are no penalties.

In summary, it's as flexible as a mortgage can be.

bluenose1

We come out of a tie in in a few months and my husband wants us to get an offset mortgage.
First Direct look the best, however it appears that you can't offset against your ISA's. We have approx £21,000 in ISA's so not sure what to do.
Any advise appreciated.

medic1978

keep your ISAs and make sure you get the best rate for them...

If the ISA rate is the same or more than the First Direct mortgage rate then the net effect is the same as offsetting

jamesd

bluenose1, as medic1978 said, you're probably going to be best off keeping the ISAs independent. Even people who can offset with ISAs are finding that they make more in ISA interest than they would save in mortgage interest if they put the money into the offset ISA account.

So long as your ISA interest rate is above your mortgage interest rate you'd also generally be better off by putting money into the ISAs instead of the mortgage offset account or overpayments.