Best Offset Deals ?

Rawhide_2

I have a couple of bog-standard 4.99 fixed rate mortgages which will expire soon.

Anyone done any research recently on the best offset deals with minimum arrangement fees / valuation etc. I guess I want to have my cake and eat it.

I'm looking to put 22K repayment and 37K interest only (leagcy mis-performing endowments) into a a five year offset and overpay - approx £750 per month.

Yorkshire BS are offering no fees, but 6.34% on a two year fixed offset. Anyone seen anything better.

FirstDirect have offered me a lower interest rate but deal requires loads of arrangement / valuation fees

Undoubtebly the most significant MS project yet !

homer_j_3

offsets may not be the best option for you?

A straight forward mortgage with the ability and flexibility to overpay may be better or

a simple exercise of trying to work out what the most you can guarantee to pay each month and then reducing the term when you remortgage to fit your budget and look to save this way!

Rawhide_2

Interesting.

Which lenders should I be looking at for a straight forward mortgage. The few that I have spoken to so far dont offer much flexibility - max 10% overpayments - I want to pay more

homer_j_3

but maybe if you thought about increasing your repayment portion on your mortgage and reducing your overpayment to budget so it fits under 10% you may have a lot of choice?

If you were to increase your payments by an extra £200 per month through reducing int only and increasing repayment then your overpayment ability would reduce under 10% - just incase it wasn't clear.

Rawhide_2

Even though you tried to make it clear, I'm not sure I understand. Do you mean for example reducing the term of the capital repayment to 50 months instead of 60 ?

To add a further complication, I will have approx 25K free cash available around next May. With a fixed rate offset product I could pay such a lump sum off. Does a standard variable rate product usually allow large lump sum payments ?

6.34% seems high compared to current variable rate but no telling how many small interest rate rises are in the pipeline. Perhaps I should sit tight and wait to see what fixed rate deals are available at the end of October when the current 4.99% FR expires, or even allow them to naturally revert to variable rate.

homer_j_3

what I was saying is that if you had a budget of say £1k per month to pay off your mortgage and the term of mortgage you are looking at gives you a repayment of say £300 per month thus leaving £700 left over which puts you outside the 10% criteria - why not lower your mortgage term so your £300 increases significantly enough to bring the £700 down to allow you to stick within the 10% limits.

homer_j_3

Just to add - something LIKE (not saying it is suitable) the Coventry 5 year Fixed rate for 6.49% with no set up costs and no tie ins - may give you the option to overpay unlimited amounts as and when and even apply the 25k overpayment. if interest rates have decrease next year then you can jump ship - if they are still looking like they are keeping rising, you can keep your sanity knowing that in a years time your 2 year fix isnt going to bite you in the backside.

I would seek professional advice as clearly there are more ways to approach your scenario than you expected and they will ensure you get the best deal possible.

Rawhide_2

Yep, got it. Many thanks

I did try the recommended T & C broker route but didnt think they were listening to my preferences, i.e I am interested in a fixed rate but they ignored that.

The YBS 2 year 6.34% offset is similar to Coventry 6.49% in that they both have no set up costs, but I somehow feel more comfortable with 2 years rather than 5 and possibility of having to pay redemption fees

homer_j_3

I haven't fully assesed your needs or understood your circumstances so its very difficult to give you any accurate direction but what you are saying to me is:

You would rather pay a couple of pound less per month to be tied in for 2 years and risk that interest rates will have gone up even more at the end of the 2 year. The deal I was talking about would give you the exact same flexibility with overpaying (presuming you do not want to borrow this back) and keep peace of mind that at the end of the same 2 year period you will not have to pay an increased rate.

If rates deacrease sufficiently enough at any point on or before this 2 year period there is only the exit admin fee of about £195 to pay to switch that across.

Your decision at the end of the day - I hope you have found the info helpful

Rawhide_2

Thanks very much for your comments, very helpful indeed.

If I had only taken out a 5 year fixed rate 2 years ago ...........;)

Rawhide_2

The Coventry 5 year fixed rate product must be fairly hot, its being withdrawn tommorow