Offset Mortgages -- the Numbers

DVardysShadow

Royal29 wrote: »

Hi

First time Ive used this site. Very interesting.
Ive got a question hope somebody could please help.
Im a deputy for my great aunt, who I drop money of for each week. Ive got a bank account in my name which her money goes into.
Now im not sure if this is legal or not but could I use what ever money is in that account to offset my mortgage.
The bank said cant see why not, and DWP said its a personal thing, but im still not convinced.

Thanks

any advice welcome

New thread started

https://forums.moneysavingexpert.com/discussion/3920175

SpringerMum

Hi, I've just joined and haven't had chance to read all the posts in this thread but what I have read so far is very interesting

Quick question - me and my hubbie were "sold" a current account mortgage by a mortgage adviser with the RBS. After having several "heart attacks" when drawing cash out of the account - not funny seeing such a negative balance on the current account - we decided to move mortgages.

Has anyone successfully taken their bank to task on the mis-selling issue?

Thanks in advance.

OverlandLandy

why do you think you have been mis sold? What you describe is the ethos of the account?

Did you not feel elation when you saw the £100's saved in interest - assuming you had budgeted to bring the start balance down each month?

pauljoecoe

Through the use of savings and 0% credit cards I paid 17 pence in interest on my First Direct Offset mortgage!!!

Just got to consider what to do with 'spare' cash now as its pointless keeping any more money in the FD accounts.

Alan_the_skinflint

SpringerMum wrote: »

Quick question - me and my hubbie were "sold" a current account mortgage by a mortgage adviser with the RBS. After having several "heart attacks" when drawing cash out of the account - not funny seeing such a negative balance on the current account - we decided to move mortgages.

Has anyone successfully taken their bank to task on the mis-selling issue?

Mis-selling because it wasn't financially correct for you? (possibly) or because you didn't like seeing the big negative number on the cash point?! (no )

Did you lose out financially? and if so why? (not enough offset to start with, not enough money going through your account, spent some on a new car etc.?)

I suspect that some offsets have been mis-sold - they certainly aren't the right mortgage for everyone - but you'd have to prove that the sums would never add up using any reasonable assumptions (either the ones they assumed for you or the ones you gave them...) I expect.

BobbyBaggins

I have read through the thread (well most of it anyway) and have done the calculations and it appears that I will be better off with an offset mortgage. However, one concern I have relates to the FSA compensation scheme.

If I was to have 120k in savings, split across 2 accounts with different providers, it is covered by the scheme if both providers were to go bust.

If I was to have the whole ammount with one provider, only 85k would be covered.

What would happen if I had 120k in my current/ savings account and it was offset against my mortgage? If the company went bust, would I still owe the mortgage amount less the savings? or would I owe the mortgage amount less £85k which is the amount covered by the scheme.

Anyone have any idea? It may seem unlikely, but some very big firms went under in the last few years and there may well be more to come!

kidmugsy

I think that's a perfectly reasonable concern. We're considering a "family offset" mortgage where the offset cash would be in accounts in three different names.

vacheron

BobbyBaggins wrote: »

I have read through the thread (well most of it anyway) and have done the calculations and it appears that I will be better off with an offset mortgage. However, one concern I have relates to the FSA compensation scheme.

If I was to have 120k in savings, split across 2 accounts with different providers, it is covered by the scheme if both providers were to go bust.

If I was to have the whole ammount with one provider, only 85k would be covered.

What would happen if I had 120k in my current/ savings account and it was offset against my mortgage? If the company went bust, would I still owe the mortgage amount less the savings? or would I owe the mortgage amount less £85k which is the amount covered by the scheme.

Anyone have any idea? It may seem unlikely, but some very big firms went under in the last few years and there may well be more to come!

What would happen is that the FSA would use the "rule of offset" to cover your losses. This is assuming you have an offset account with separate mortgage and savings pots rather than a "current account" mortgage where you just appear to have a huge overdraft.

For example if you had a 200K mortgage with 120K offset and the bank collapsed, 35K (120-85K FSA limit) would be used to reduce your mortgage from 200K to 165K. The remaining 85K remains as liquid cash.
Therefore you would not "lose" any money, but you may lose some liquidity.

For this very reason we have our offset savings split between my wifes offset account and my own, meaning that we would retain 2x85K as cash if such an event was to occur.

Cyclist

I'm having decision fatigue trying to fathom my way through remortgaging...! I have an offset with FD fixed at @3.29% - balance to pay is £115k with LTV of 40%, 19yrs remaining. There is about £15k in linked accounts. We will be able to pay off a lump sum of about £60k in 7 years time when the husband retires.

FD are not offering very exciting rates at the moment and I'm wondering whether to ditch and get a different product. To get another offset would mean shifting all mine and husband's accounts which feels like a big move - I do like FD, been with them over 20 years though I shouldn't feel so sentimental. However, there is an offset 2 year tracker at 3.29% - just depends on whether I dare take the chance on the base rate....

Any further options I could explore?

harvey115

3.29% connected with BoE base rate is a good rate for an Offset Mortgage.

Others providing Offset are Barclays, Natwest, Clydesdale etc. I think you are on the best one from all these.