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Offset Mortgages -- the Numbers

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  • americantxreliefbureau
    americantxreliefbureau Posts: 1 Newbie
    edited 1 March 2013 at 8:14AM
    How does this numbers add up to? I am kinda lost with all those figures you presented. I really appreciate the time and effort you did to come up with all these formulas on how to calculate certain figures. Thanks.
  • gaikami
    gaikami Posts: 9 Forumite
    That's a great post thanks for share
  • We have an offset mortgage that works very well for us as I am self employed and my income is very lumpy. I have a fair amount (over £85k) saved up in the offset account and had a sudden panic the other day about protection of savings!

    I do not want to pay off the mortgage with the money as it suits me to have it there if I need it, effectively acting like a relatively low cost loan if needed. What happens if the bank goes down though? Is only £85k protected? Or, as it is linked to the mortgage, is that taken into account as some sort of trade off (I assume not)?

    Apologies if this has been raised previously but I haven't looked through all 44 pages!
  • johnbhoy10
    johnbhoy10 Posts: 452 Forumite
    We have an offset mortgage that works very well for us as I am self employed and my income is very lumpy. I have a fair amount (over £85k) saved up in the offset account and had a sudden panic the other day about protection of savings!

    I do not want to pay off the mortgage with the money as it suits me to have it there if I need it, effectively acting like a relatively low cost loan if needed. What happens if the bank goes down though? Is only £85k protected? Or, as it is linked to the mortgage, is that taken into account as some sort of trade off (I assume not)?

    Apologies if this has been raised previously but I haven't looked through all 44 pages!

    I'm with FD and can go online anytime and move money back and forth from firstdirect current account and mortgage account.Why don't you shift it all over to the mortgage or if it's a larger sum than mortgage shift as much as possible whilst still leaving a negligible mortgage. You can still get at it at anytime but takes away the doubt!

    They wouldn't would they???:eek:
  • Yorkie1
    Yorkie1 Posts: 12,004 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Spam reported for BA's multiple posting of unrelated videos.
  • Please give me more information about offset mortgage? Thanks.
  • peach_2
    peach_2 Posts: 29 Forumite
    Hi. I'd like an Interest Only offset mortgage but don't earn £50Kpa so don't qualify for the First Direct one. Does anyone know other companies that offer them. I have £60K in savings and want to borrow £120.
  • I'm generally quite good with things like this but I'm stumped when working out whether I'd be better switching my mortgage to an offset.

    My aim is to pay off our mortgage as quickly as possible. Currently we're on a 2.59% SVR through mortgage express, the original mortgage for £147,000 with just over £100,000 outstanding. Minimum payments are about £540 p/m and I'm currently overpaying by £504 taking total payments to £1044 p/m.

    If I switched to an offset mortgage, any savings above the min. payment would be added to the offset account. I also have about £13k in ISA's that I'd add to the offset account.

    Any advice about whether an offset mortgage would actually save me a great deal over the life of the mortgage vs. what I'm currently paying?
  • johnbhoy10
    johnbhoy10 Posts: 452 Forumite
    edited 25 July 2013 at 12:18PM
    I've wondered for ages why these products seem to cause so much confusion!

    I got an offset with FD a few years ago when their lending criteria wasn't as bad as it is now. (ridiculous now imho)

    We picked an offset lifetime tracker at that time because-

    1) it was from memory 'free' (think they refunded legals)

    2) it was a fairly decent rate

    3) the flexiblity this product offered was just brilliant!

    Now, maybe our decision was made easier because we didn't have an overly large mortgage amount (not small either) and also the fact ''WE HAD NO REAL SAVINGS TO SPEAK OFF''

    We were coming off approx 5% with the YBS and going onto something around 3% and that in itself was a bonus.

    The real trick was letting them know we wanted to pay 'interest only' every month and just make payments as and when we wanted. From memory, the keyfacts/offer summary showed a capital/interest payments and we just told them we wanted interest only with option of making our own capital payments.
    Another cracking feature for us was if rates had started to head north because it was a tracker we could jump ship at any time.

    Now,we might be fortunate in some respects but we've also had my redundancy and another baby in the house in that time.

    I could clear the thing today if i wished but i keep a float for emergencies and other interests (which if done correctly should make more than the mortgage costs.)

    In summary, probably the best financial decision( by a long way) i ever made was moving to FD offset tracker just over 3 years ago.

    And remember i don't believe we were particularly affluent at that time and like i stated before we had no savings!

    Only becomes an issue deciding whether to take an offset or not if you've got fairly hefty savings imho and if you're in that boat you can probably handle the hit more than a lot of us if it goes wrong!!
  • Ecoman
    Ecoman Posts: 18 Forumite
    I have an offset mortgage with just 4 years to run and my lender has written to me telling me that it is no longer economically viable to continue this service as there are so few customers with this type of mortgage. They are therefore closing my accound from 1st October and tell me I need to sort out a new current account but they will still hold my mortgage. (They even referred me to this site!). Has anyone had this happen to them? What happens to my mortgage because it will no longer be offset as I won't have an account with my lender? Any help would be appreciated.
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