Offset Mortgages -- the Numbers

hpuse

ricky_south wrote: »

http://www.standardlife.co.uk/content/myfreestyle/reduce/offsetting.html

they could not miss-sell the product more if they tried. this is so incorrect it is unbelievable they can be so arrogant to explain their offset as working in such a way when it does not. the interest earnt on the money within the offset goes towards paying off the loan amount. you still pay interest on the full loan amount.

and the FSA can't do nothing about it.
standard life = taking all you money so you can have a sub-standard life.

ricky

You do not "earn" any interest, you offset what is potentially "earned" otherwise. I think thats the whole point of an offset mortgage. I still can't believe Standard Life got this fundamentally wrong as per your post.

oscardog

We are about to transfer to a 5 yr fixed rate offset with Coventry BS. It is an offer to existing customers and our 5 yr fixed ends this month (good timing!!).

It is 4.79% which is more than most SVRs at the moment but at least it is less than before, it is offset and there are no fees or hassle as they are our current lender.

We just had to sign one form - job done.

melissa'smoney

hi all,
Been pretty mortgage savvy over the years thanks to :money: and https://www.moneysupermarket.com and got some good deals.

Been with A&L for last 5 years on various deals and my 2yr fixed ended in Feb 09 and i'm now on their base rate 4.99% until i sort something out, have now learnt mortgage borrowing has changed since i last did it and it's based on outstanding balance and house value, not great for me! I'm 75%

Ok, anyway, been looking around and A&L haven't been too helpful and the best they can offer me is 1yr fixed at 4.79%.
(A&L have me at 80% and hence the crap offers)

Mortgage 90K
Savings 10K

Been looking and FD offset, 2.99% fixed for 2 years, no tie in.
I do have savings and wondered if this would be worth looking at, rang them tonight and gone through it all and it seems pretty tempting. I'd want to pay repayment not interest and i like the idea of being able to overpay when i like (£1000 in fees etc which isn't great)
Also i would need to transfer my bank acc, currently have A&L premier direct acc and want some opinions on if this is a good move....

Have people moved to FD and been impressed, is there anything i need to look out for, ask etc,

Any help would be greatly appreciated xxx

atlantis187

Hi melissa

We switched our mortgage to First direct back in December and went for one of their tracker deals they do make u open a 1st current account this is where they take the monthly mortgage payments from and this is also linked to ur mortgage for offsett purposes.

I would highly reccomend First Direct they provide excellent customer service and keep u informed through the whole process.

And also as a bonus they pay u £100 for opening a 1st current account

melissa'smoney

atlantis187 wrote: »

Hi melissa

We switched our mortgage to First direct back in December and went for one of their tracker deals they do make u open a 1st current account this is where they take the monthly mortgage payments from and this is also linked to ur mortgage for offsett purposes.

I would highly reccomend First Direct they provide excellent customer service and keep u informed through the whole process.

And also as a bonus they pay u £100 for opening a 1st current account

hi thanks for this, they've offered me the fixed rate 2.99% (arrangement fee £299) 2yr .....or the tracker at 2.89% but the arrangement fee is £799! :eek:

I'd like to swap everything and their bank acc looks good, A&L have been pretty crap tbh and still owe me £4000 in reclaim charges:money:

Did you have to pay all the fee's upfront? (£799 arrangement fee, £149 closure fee, £599 booking fee and £99 valuation)

Also should i be looking at a fixed rate or a tracker?

thanks xx

atlantis187

The rates they are offering now are not as competative as when we remortgaged

We took out a tracker at 0.79% above BoE base Rate so currently our mortgage is 1.29%

There was on arrangement fee no booking fee's free valuation basically everything was free we didnt have to pay anything extra.
We do have to pay the £149 closure fee if we do ever decide to go for another deal elsewhere.

I think u can add the arrangement fee to the loan but if there is a booking fee and valuation fee then this must be paid upfront.

atlantis187

Sorry didnt answer ur questions fully.

Personally I wouldnt fix for such a short term like 2 years as this come around very quickly and then u would need to pay another set of arrangement fee etc..

Regarding the tracker whilst this looks good now while rates are historically low once the rates start climbing to say 4/5% this 2.89% will look very unattractive.

Everything also depends on ur LTV I think First Direct have changed it to 75% from 80%.
If u have a large amount of savings to offsett against the mortgage then u may be able to gain from these deals

If u have got good LTV check out HSBC they seem to be doing a good 5 year fix deal at the moment.

For the banking side of things I cannot fault first direct they are top notch. They give u a fee free overdraft of £250 and as I mentioned before £100 joining incentive. And also the most important thing of all they have uk based call centres.

ktm250

Hi all, Newbie here

I am considering an offset mortgage, but am worried that I could switch and be worse off

I currently have a mortgage with the Nationwide, with 2 flexible advances attached to this, all fixed, 2 @ 4.79 and 1 @ 6.09 for the next 2 years, to switch it is going to cost me £2000 approx !! I would then incur set up fees

I have an overdarft which costs £30 per month

My wife has her own business, which although doesn't have any expensive overheads ( home working / internet based ), in the current climate isn't bringing in any money.

Main question is should I stay or should I go ( sounds like a good title for a song )

Have been looking at the FD deals and the seem v.good

Cheers

Darren

jamesd

You have an overdraft, so I assume that means you don't have any significant amount of savings, right? So what will you put in the offset account if you don't have any savings? If there's nothing in the offset account then the offset feature can't save you any money.

Why are you looking to switch? Looking for variable rates now, when they are likely to go up a lot in one to two years to fight the inflation that's expected then?

It's not possible to say whether switching is a good idea because that depends on how much is at each interest rate and what the new rate will be. Best to visit a mortgage broker. They will probably smile with delight at seeing any sign of a customer right now.

If you want safety, sticking where you are for perhaps six months and then getting the best available five year fix seems like a fair bet for best result over the next five years. Should lock in the low long term fix rates and protect you fro the inflation-fighting variable rates that we can expect. You might also look into variable rate deals with a cap, since these also protect you from big rises, though not all of them. That way you might benefit from the low current rates and not suffer so much from the anticipated later increases.

nhp

melissa'smoney wrote: »

hi all,
Been pretty mortgage savvy over the years thanks to :money: and https://www.moneysupermarket.com and got some good deals.

Been with A&L for last 5 years on various deals and my 2yr fixed ended in Feb 09 and i'm now on their base rate 4.99% until i sort something out, have now learnt mortgage borrowing has changed since i last did it and it's based on outstanding balance and house value, not great for me! I'm 75%

Ok, anyway, been looking around and A&L haven't been too helpful and the best they can offer me is 1yr fixed at 4.79%.
(A&L have me at 80% and hence the crap offers)

Mortgage 90K
Savings 10K

Been looking and FD offset, 2.99% fixed for 2 years, no tie in.
I do have savings and wondered if this would be worth looking at, rang them tonight and gone through it all and it seems pretty tempting. I'd want to pay repayment not interest and i like the idea of being able to overpay when i like (£1000 in fees etc which isn't great)
Also i would need to transfer my bank acc, currently have A&L premier direct acc and want some opinions on if this is a good move....

Have people moved to FD and been impressed, is there anything i need to look out for, ask etc,

Any help would be greatly appreciated xxx

Regarding FD - I'm with them at the mo - tracking at 0.79% above BoE base rate for life of the offset morgage.
FD are brilliant, and their accounts great to manage online, very easy.
Looking to pay off mortgage within the next 10 years hopefully.
Cannot speak highly enough of them and their customer service.