offset mortgage, advice please

shawie60

Hi Guys, I need a little advice if I may.
We have a Offset mortgage with first direct which we’ve been paying without problem for about 7-8 years. Each time I get a statement it says its interest only which concerns me in case I still have a large amount to pay on the mortgage at the end of the term. Each year I ring up to check whether this is the case and each time I’m told no it will be repaid and they have to state that because its partly a loan or something , but to be honest it worries me as we don’t have any endowments or anything else etc in place to cover it if it isn’t.
My question is will there be extra to pay once my 15 year term is up and we continue to pay as we have been doing or will the mortgage be settled and the property ours ??
As I say I've queries this every time I get the statement and on each occasion I've been told the mortgage will be paid in full but from what I've read I doubt that.
glenn

glosoli

What interest rate are you on, what are your monthly payments, how much is in your offset account and whats the balance of your mortgage?

shawie60

the interest rate is 1.5% p.a. we pay £500 (we increased it to make sure it was paid on or before the time required and we are due to review it again) the offset mortgate balance is £15064.15 the offset loan balance is £23400.00
thanks for helping ..
glenn

glosoli

Okay so -

Mortgage balance is £23400
Offset balance is £15064
Your paying interest on the difference which is £8336 (based on 1.5% is £10.42
Original loan term 15 years, and your 8 years into this with 7 years remaining

Based on a 7 year mortgage, your minimum payment is around £294, with only £10.42 going towards interest.

Based on paying £500 a month, your mortgage is due to be finished in around 4 years, well ahead of term.

Thats my understanding of the situation, if im incorrect with the data let me know

shawie60

glosoli wrote: »

Okay so -

Mortgage balance is £23400
Offset balance is £15064
Your paying interest on the difference which is £8336 (based on 1.5% is £10.42
Original loan term 15 years, and your 8 years into this with 7 years remaining

Based on a 7 year mortgage, your minimum payment is around £294, with only £10.42 going towards interest.

Based on paying £500 a month, your mortgage is due to be finished in around 4 years, well ahead of term.

Thats my understanding of the situation, if im incorrect with the data let me know

thanks but i dont think thats right, the total we owe is £38464.15 and we still have approx 7.5 years to go.
Originaly our mortgage was £23400 (which it still is) we also had a offset loan which we used to renovate and do work on the house. That was £22600 (currently £15064.15) we pay £500 a month which has brought the loan figure down to £15064.15.
Hope that makes things a little clearer.

glosoli

Is it 2 separate accounts with 2 separate payments?

£38464.15 on 1.5% has a minimum payment of £452 based on 7 years 6 months, with it being paid off in 6 years 9 months based on £500

shawie60

glosoli wrote: »

Is it 2 separate accounts with 2 separate payments?

£38464.15 on 1.5% has a minimum payment of £452 based on 7 years 6 months, with it being paid off in 6 years 9 months based on £500

that sounds about right, our previous monthly payment was about £460 and we increased it to £500 reduce it down quicker. The main question is though, with them quting it as an 'interest only' mortgage will I still have the mortgageto pay at the end? thats my main concern as I mentioned we dont have any endowments etc to take care of it if we do ..

JournalGirl

No

Their offset mortgage is interest only - so you only require to pay the interest each month, which would be around £30 - 40 ish (Just a rough guess based on me having a similar mortgage of about dounle the size. You are overpaying this mortgage by over £400 every month, so it will be clear in approximately 7 years.

You have nothing to worry about :-)

shawie60

JournalGirl wrote: »

No

Their offset mortgage is interest only - so you only require to pay the interest each month, which would be around £30 - 40 ish (Just a rough guess based on me having a similar mortgage of about dounle the size. You are overpaying this mortgage by over £400 every month, so it will be clear in approximately 7 years.

You have nothing to worry about :-)

many thanks, thats a big relief off my mind ..
I appreciate the input from everyone, its nice to be able to get help from people more experienced in other fields ..