Offset Mortgages -- the Numbers

MarkyMarkD

Of course. But if it was that simple, you wouldn't be bothering to offset - you could simply pay off your mortgage.

So, assuming that at some stage you will actually borrow the money, the rate must matter. Mustn't it?

PaulieC_3

I'm about to remortgage and fancy moving to an off-setting account where I will pay in everything - salary, savings, etc. FD is obviously a better rate than the One Account. I know a lot of people are unhappy with OA rates. But are there any advantages to the OA over FD? Is it more flexible for example if you need to borrow? Anybody had both and can compare the two? Many thanks.

Gambler

gil13 wrote: »

Can't link a Cash ISA..

Yes I know, I keep emailing them to request they consider. If we all did the same perhaps they might listen. My argument was it would be a great marketing tool, would bring them in line with some of their competitors, would continue to enhance loyalty amongst customers and would help to increase the banks deposits in a pretty straightforward way.

My fixed rate ISA with Lloyds matures in a couple of weeks and I still can't come up with a good enough reason not to close it and transfer to my FD offset.

Treacle_Toes

Gambler wrote: »

My fixed rate ISA with Lloyds matures in a couple of weeks and I still can't come up with a good enough reason not to close it and transfer to my FD offset.

I've done exactly the same this afternoon. I've transferred all except £1 from last year's Egg ISA into my FD offset savings account. The difference in interest rates is negligible (Egg going down all the time) and psychologically I can 'see' the money making a difference with FD's online facility.

TT

gil13

Gambler wrote: »

My fixed rate ISA with Lloyds matures in a couple of weeks and I still can't come up with a good enough reason not to close it and transfer to my FD offset.

The main reason for me wanting to retain monies within the ISA is the tax break (one of the few we get) that extends beyond the mortgage term, although it is tempting to cash the lot in and offset it. I guess I want the best of both worlds, monies in the shelter of an ISA but with the ability to offset them against a mortgage balance. I hope First Direct are looking at it, they said they would and I think it could bring alot of ISA balances over onto their books if they did. I find it a bit difficult to cash in many years of ISA contributions (2 of us) but if I had just a small amount I would probably do it. Having said that we are not adding to our ISA in this new tax year so far but our offsetting it due to poor interest rates, the rest of our ISA's are tied up until Oct in an ISA bond at 6.3% (be nice to get those rates again)!

whitesatin

Our fixed rate with A&L finishes in September. I phoned FD with a view to finding out more re offset mortgages but was surprised to find out that they will not consider us because of my age, 57 at the moment and that they won't lend to anyone who is due to retire before the end of the loan. We have nine years to go till end of present mortgage. My husband is only 50 but that didn't matter to them, they still wouldn't consider us as a couple. Their loss in my opinion as we have quite a lot to offset our £85,000 mortgage but that will probably now go to The Woolwich who did not object to my age at all, as long as one of the mortgagees was under retirement age by end of the mortgage.

A&L could not offer us much of a deal re fixing a rate although, to my surprise, they will now give you a rate five months before the existing one expires whereas before they were not interested in quoting until 2 months before the deal expires. What amazed me was that the fix (3 years with £599 fee) was at 4.09%, which seems high to me with the bank rate being so low.

nic283

Hi folks,

Is there a minimum amount of savings you need for an offset mortgage? Is it worth offsetting if your savings are less than say 10k?

Cheers!

gil13

No, there is no mininimum amount you need to offset, they will just set you a 1st account current account and an offset savings pot if you want it. You then do what you like, the mortgage payment is taken from the linked 1st current account - so if you don't move your banking over you need to make sure you set up a transfer from your existing current account, we do it a few days before.

MarkyMarkD

whitesatin wrote: »

A&L could not offer us much of a deal re fixing a rate although, to my surprise, they will now give you a rate five months before the existing one expires whereas before they were not interested in quoting until 2 months before the deal expires. What amazed me was that the fix (3 years with £599 fee) was at 4.09%, which seems high to me with the bank rate being so low.

Why do you think 4.09% over three years is expensive? Do you know that BBR will stay below (say) 3% on average over the next three years? If you don't know that, then why should they not expect to make something like a reasonable margin on lending to you?

lilacrose

existing deal with the abbey coming to an end i september and they're not offering any good deals to me. am considering an offset account, but worrry about payments in the future when interest rates rise againg. do any providers do fixed or capped rates for offset accounts? i have ltv 45% and 10 years remaining on my term.