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Offset mortgage reserve or loan
RedFraggle
Posts: 1,505 Forumite
in Loans
Hi All
Can you tell me if I am missing anything here:
I have a Woolwich Offset Mortgage with an available mortgage current account reserve overdraft of just over £9000 and a mortgage rate and therefore an interest rate on the borrowing of 3.09%.
I need a loan of £8000 and have the option of using the offset reserve or getting a personal loan which I can get at 4.9% APR.
Both options would be clearable within 3 years paying £250 monthly.
Can you tell me if the following is correct:
Using the reserve:
Cheaper APR
Flexibility of not having to make a fixed payment i.e. if things get tight we could just pay the interest rather than the full payment (this would be done in dire circumstances only!)
No early repayment or set up fees.
The APR isn't fixed and could go up or indeed down
Using the loan:
Slightly more expensive
APR would be fixed
Full payments would have to be made monthly
Using the reserve is looking like a bit of a no brainer with the exception of the potential for interest rates to rocket increasing the payments but I think there's a significant buffer there.
Is this the no brainer I think it is or am I missing something?
Thanks
Can you tell me if I am missing anything here:
I have a Woolwich Offset Mortgage with an available mortgage current account reserve overdraft of just over £9000 and a mortgage rate and therefore an interest rate on the borrowing of 3.09%.
I need a loan of £8000 and have the option of using the offset reserve or getting a personal loan which I can get at 4.9% APR.
Both options would be clearable within 3 years paying £250 monthly.
Can you tell me if the following is correct:
Using the reserve:
Cheaper APR
Flexibility of not having to make a fixed payment i.e. if things get tight we could just pay the interest rather than the full payment (this would be done in dire circumstances only!)
No early repayment or set up fees.
The APR isn't fixed and could go up or indeed down
Using the loan:
Slightly more expensive
APR would be fixed
Full payments would have to be made monthly
Using the reserve is looking like a bit of a no brainer with the exception of the potential for interest rates to rocket increasing the payments but I think there's a significant buffer there.
Is this the no brainer I think it is or am I missing something?
Thanks
Officially in a clique of idiots
0
Comments
-
As an offsetter myself I would say use the reserve but also tighten your belt a little to overpay as much as you can each monthI’m a Senior Forum Ambassador and I support the Forum Team on the Pensions, Annuities & Retirement Planning, Loans
& Credit Cards boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com.
All views are my own and not the official line of MoneySavingExpert.0
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