Offset Mortgage Help

ger2000

Folks, I have 27500 remaining on my mortgage with a rate of 2.15% with HSBC. The question is would I be able to pay more off my mortgage if I changed to a offset deal. I have about 12k that would be able to use. Any advice greatly welcome.

suse*

I am not sure what you're asking really. I have an offset with a different bank where I have some savings in there, but I also make overpayments each month.

The idea of an offset is you don't pay interest on that amount, so for your 27500 you'd only pay interest on 15500 of it if you had the 12k in there. If your deal is 2.15 though depending which tax band you're in you might be able to get a much higer interest saving acount for some of that eg 5-6% I have heard people talk about. So if you just keep it at 2.15 (assuming it is fixed) then it might work out better that way.

You need to go through what options you have for savings / income etc and how long do you need that mortgage for really to see which is the best way for you.

I am not a mortgage broker I just have an offset myself.

dimbo61

You have a small mortgage at a low rate of 2.15% so I would keep your existing mortgage and build up savings in ISA,s for when your mortgage is paid off!
Not worth remortgaging as fees to pay

ger2000

Dimbo61, thanks very much for the advice. Like everyone else I wish to clear down the mortgage asap.

Mattygroves2

ger2000 wrote: »

Dimbo61, thanks very much for the advice. Like everyone else I wish to clear down the mortgage asap.

But that's not always sensible if you can get a better return with your savings. Which is why Dimbo61 suggested you look for ways of making sure your savings earn more than you'd save in mortgage payments. You end up with the satisfaction of knowing you could pay the mortgage off but you choose not to. I've been doing this for a number of years as we are on a base plus 0.99 lifetime tracker and until now I've had no problem exceeding this even after tax - getting harder now as I've got a much bigger balance than you.

dimbo61

I have an offset mortgage and overpaid and built up savings into the offset accounts.
We have paid down our mortgage and could be Mortgage free by xmas But we are looking at another property :-(
Ah well one day.
You can overpay the mortgage and build tax free savings

getmore4less

ger2000 wrote: »

Folks, I have 27500 remaining on my mortgage with a rate of 2.15% with HSBC. The question is would I be able to pay more off my mortgage if I changed to a offset deal. I have about 12k that would be able to use. Any advice greatly welcome.

You could pay the £12k off the mortgage today if you wanted.


issues are


any penalties for overpaying
if there are when do they stop
if a promotional rate what/when is the follow on rate
what rate you get on the saved money
Is it in ISA
will you need the money back
what is your current surplus


as you could get close or more savings than the current mortgage rate you might want to look at that side of things.


it may be you can't be bothered for the small amount you could earn on £12k and prefer to just get rid of the mortgage.


offsets work because you are in effect borrowing less.
overpaying does the same thing but less flexible


key is the rates of any offset you can get against the current deal and how much more it will cost to have the flexibility of the offset.


If you don't leave yourself too short of ready cash just overpaying may be a solution that works.

ger2000

Thanks getmore4less, there are no penalties for overpaying with the HSBC. The 12k is in a bank account that is paying 3% just now. The 12k albeit is not needed just now but worried I may need it in the future for any unexpected emergencies. What would be a typical offset rate just now? Thanks in advance.