Offset Mortgages -- the Numbers

albionrovers

getmore4less wrote: »

If you want to keep access to the money then continue to offset.
IF you might move(up) having the line of credit could be usefull.

Look for a better places for the money, some of the regular saving accounts pay more even if a HRT payer.

Use your ISA allowances first they are worth more than offsetting in the long run.

Check that if you go 100% offset they don't close the mortgage on you.

===

I keep £300 going on my One Account, for the above reason.
Question is - what if RBS go bust? For that reason, should I pay my £300 off and be done with it? Or is there no risk of losing out?

BS999

My 5yr Offset mortgage deal ends at the end of Sept.... When should i start getting quotes??... 3mths in advance??... 6mths in advance??.. anyone know how long most quotes are valid for??

Many thanks!!

Gambler

Gambler wrote: »

That's always been the case for me since I became a homeowner about 5 years ago. My Cash ISA savings rate was always higher than my mortgage.

Until now................I am 6 months into a 5 year fixed offset with First Direct with a rate of 5.29%.

I currently have a large cash isa with a fixed rate of 6.5% with Lloyds TSB that matures in April. They are offering a new fix at 3.75% on maturity.

I calculate I will be £900 worse off unless I close the ISA and move to my FD savings. Unfortunatley I have only recently realised that FD don't allow you to link an ISA to your offset.

Okay maybe long term it is not a good idea to give up the tax shelter I have worked so hard to save but £900 for a year seems like a hell of a difference.

The other idea I had was that I could drip feed back into Cash ISA's by putting the max £7,200 (Me and Mrs. G) this tax year and for the next 4 years whilst I still have the offset.

Any thoughts much appreciated. Thanks

Anybody?

I only have a couple of weeks to decide whether I want to take up a new fix with Lloyds.

Thanks

gogsboy

hpuse wrote: »

All First Direct offset tracker mortgages are interest only.

You sure? Sure the advisor I spoke to said you can have interest only or repayment

gil13

First Direct offsets can be set up as a repayment mortgage by setting up the S/O for the capital amount above the interest, they can arrange this for you and will be able to tell what the amount will need to be. This is then taken as one S/O from the linked 1st account after the interest is applied to the mortgage account. It is a flexible arrangment in that you can alter the amount at any time and indeed allow it to go interest only by altering the S/O to only cover the interest each month if you are confident of getting the returns elsewhere to pay the loan at the the end of the term. HTH

hpuse

gogsboy wrote: »

You sure? Sure the advisor I spoke to said you can have interest only or repayment

A mortgage once taken can either be repayment or interest only. FD offset mortgages are 'interest only' mortgages by the nature of agreement but gives you the flexibility to treat it like a repayment mortgage. Or in other words, your overpayment makes the mortgage look like a capital repayment mortgage every month due to its flexible nature.
First direct will not reposses your house if you continue making interest only payment till the end of the term.

The difference with a traditional 'repayment' mortgage is, FD will not work out your repayment amount every month, you yourself have to work it out and amend the Direct debit manually.

hpuse

I don't know the confusion surrounding your definition here. What is offseted is 'interest', not outstanding balance or repayment amount.

If you remember, the first offset mortgage account provider - The one Account -marketed their product this way. Pay it early and retire

ricky_south wrote: »

I went into my standard life product for its offset facility.

This product is not a offset. it uses interest on your savings account (they label offset) to repay the mortgage.

they use the term offset to define the following.
linking a savings accounts generated interest to repay a mortgage.
Below is an example.

if you have a mortgage of £200,000 and monthly repayments of £1000p/m and then place £100,000 in the offset account you still pay £1000 per month. the £6000 intrest you earn then goes towards repaying the £200,000 effectivly reducing to £194,000. this does not reduce your monthly repayments apart from a fraction (after the year you pay £970p/m).
If like me you like interest only this product is no good.


This is the only way their offset functions as i have complained many time with no change.
they miss sell this product with even their video on they website misleading customers making it look like a woolwich offset.

Below is a further warning about standard life.
They started raise their svr early in 2007 without a change to the bank of england base rate, then did not pass on any reduction to the base rate.
the last 4% reduction in boe base rate has now only been partly lowered leaving them with the worst svr on the market.

I am out the first chance i get with my finger up at them.
thank you for reading my rant. its been building up in me for a while

ricky

jamesd

hpuse wrote: »

I don't know the confusion surrounding your definition here. What is offseted is 'interest', not outstanding balance or repayment amount.

You just gave exactly the opposite of the correct answer: the offset balance is offsetting some of the outstanding mortgage balance. The reduced balance reduces the amount you pay interest on.

The Standard Life definition given isn't what an offset mortgage does. In part because if you use savings account interest you would have to pay tax on the savings account interest. Offsetting avoids that.

cityslaphead

Can you offset children's savings in an offset mortgage?

We have Child savings trust accounts for our 3 children and have saved a few thousand there; cn these accounts be linked to an offset?

hpuse

I think this how The One account product worked as well - but correct me if I get this wrong. Standard Life would have made it clear in their KFIs on how the saving interest will be used to offset, rather than the actual offset balance linked to the mortgage account from other permitted accounts.

I know this is indeed complicated, but I'm sure the sales agent would have asked this question to the mortgagee ( even though he may not have understood in the right sense.). For the saving 'interest' earned, he wants the money to be offseted in such a way that, either

a) mortgage payment to reduce
b) interest on capital to reduce

It sounds like SL does not 'link' the account on the basis of capital repayment - but this is perfectly an offset account, only difference here is interest payment, not the balance which is mistaken to be offseted based on common products from Woolwich, HSBC, Firstdirect etc.

jamesd wrote: »

You just gave exactly the opposite of the correct answer: the offset balance is offsetting some of the outstanding mortgage balance. The reduced balance reduces the amount you pay interest on.

The Standard Life definition given isn't what an offset mortgage does. In part because if you use savings account interest you would have to pay tax on the savings account interest. Offsetting avoids that.