Fixed Rate Mortgage vs Offset Mortgage - Am I missing something?

dimbo61

If you can save £1000 a month on top of the normal mortgage payments then an offset mortgage might be the perfect mortgage for you!
You can build up savings in the offset account to reduce the interest you pay on the mortgage balance!
If you need money it is sitting in the offset account.
The money in the offset account is saving you 4.25/4.5% TAX FREE
But you are also paying 4.25/4.5% on your mortgage ( WHY LTV ? )
I LOVE OFFSET mortgages having had one for over 10 years

blinko

What about the interest received on the nominated offset account. Could you say have 2 x 123 santander accounts and have those as your offset acounts

getmore4less

blinko wrote: »

What about the interest received on the nominated offset account. Could you say have 2 x 123 santander accounts and have those as your offset acounts

There is no interest on offset accounts.

They reduce the net borrowings on which interest is charged.

This is a key misunderstanding by a lot of people which makes them thing they are getting something they are not.

You do not get interest on your savings you reduce the borrowing on which you are charged interest.

jaxprescott

Be VERY careful with offset mortgages. I have taken one out with Natwest in good faith and used it as a banking facility, paying in and withdrawing large sums as needed. However, guess what - the bank has changed the rules just after I've paid in a large sum and it has taken me nearly 3 days just to get through to someone, only to be told that I have to be 'reinterviewed' to get my money back out again. I would not have put this money in had I known as I knew that it would be needed in the short term. I could have kept it in my business bank account but was worried about going over the 85K threshold for the bank guarantee scheme. Despite being unable to get through to their call centre for two days, I am still having to wait until Monday for a call back. I find this changing of the rules and service level most unacceptable. None of my circumstances have changed since I took out the mortgage and if I had a regular mortgage which I hadn't overpaid on, then none of these questions would be being asked.

getmore4less

That does not sound like a proper offset where the account with the savings is yours and you can use at any time.

if a proper offset you should have full access to the savings and current account or did you overpay the mortgage account rather than offsetting?