Am I making the right remortgage decision?

Morgage_Confused

Quick sanity check before I go ahead and re-mortgage please guys.

16 years left.
Currently on Barclays "tracker" at 2.68% owing £135000
Remortgaging to Barclays "tracker" at 2.29% Offset costing £999 fees.

I have approx 30k to offset. Im not very good messing about with ISA's and switching current accounts all the time to chase rates. So I am wanting to offset to make things easier for me. Is this a sensible option or am I wasting a grand in fees.

Thanks.

dimbo61

Well you save 0.39% on £135,000 plus you can now offset £30,000 which is now in effect earning 2.29% TAX FREE.
You can also move £15,250 into ISA,s offsetting the mortgage from April.
Now at 2.68% with £135,000 mortgage over 16 years you will be paying about £865.39 monthly and will repay £166,154
Now at 2.29% with £136,000 mortgage over 16 years you will pay about £846.67 monthly and will repay £162,561.
So new deal will save you £3,500 before we take into account your Offset money

RavingMad

My only thought would be on how long you were thinking of staying on that tracker, though? If you're happy to stay on that rate for 16 years, then as dimbo pointed out, you save just by being on that rate alone

kingstreet

You aren't remortgaging, you are asking your lender for a customer retention product.

Ensure the product you are considering can be used for that purpose and isn't for borrowers new to the lender transferring their mortgage.

getmore4less

Morgage_Confused wrote: »

Quick sanity check before I go ahead and re-mortgage please guys.

16 years left.
Currently on Barclays "tracker" at 2.68% owing £135000
Remortgaging to Barclays "tracker" at 2.29% Offset costing £999 fees.

I have approx 30k to offset. Im not very good messing about with ISA's and switching current accounts all the time to chase rates. So I am wanting to offset to make things easier for me. Is this a sensible option or am I wasting a grand in fees.

Thanks.

£135000 16y 2.69% £866pm

£135999 @ 2.29% paying £866pm break even at 2years from then it is the winner.

Offsetting does not earn interest at a higher rate you are JUST borrowing less.

with £30k offset payback period is 1year.(at the loss of interest on the savings)

Barclays allow ISA in the offset pool so you can build up future tax free savings


Depending on the LTV there are offsets out there with lower rates

Morgage_Confused

I cant find any lower rate offsets?
My ltv is 30%...approx 400k borrowing 135k
I looked at that Coventry offset variable at 1.99% but I dont know coventry's historical commitment to keeping in line with the boe base. Whilst I know barclays also have their own BBBR, I do know they historically have followed BOE.

So whilst im confident barclays is gonna be BOE + 1.79%
Im not confident coventry is gonna be BOE + 1.49%

Does anyone know if coventry have historically followed boe?

Or have you seen another offset that might be interesting?
Thanks

p.s. I know Chelsea have a five year fix offset at 2.39% which is also interesting.

Morgage_Confused

One last question...

Barclays offer two options on their offsets.
1. Reduce monthly payments
2. Reduce term with fixed monthly payments.

Am I correct in thinking that if I use option 1. and just leave any interest saved in the offset account then it ends up the same as option 2. In other words theres really no difference, but doesnt option 1. leave me with more access to my offset cash. Option 2 is like forced overpayments?

thanks

getmore4less

Barclays could go away from BOE as base there are some with enough docks to fight it but not all.

You have the basic idea with barclays options 1,2 with option 2 they don't drop the payments if rates go down but that is very unlikley.

You also need to check how they are doing the reserve these days, when I took mine out the reserve OD went up as you paid of capital and it still works like that so we can borrow our money back and effectifly become interest only others have confirmed the same.

They may have changed that for new lending as they have been trying to get rid of reserves.

Morgage_Confused

Yeah my reserve on my current tracker went from 50k to below 10k. Although I never used it. They were asking me to cancel it completely.

I have a feeling the reserve on the current trackers and offsets is no longer available but ill check.

I have been on BBBR at 0.5 for many years now so I am banking on the idea that if they were ever gonna deviate they would have done it by now.

I took the paperwork in today to Barclays today so theres no going back now.

Thanks for the advice guys.

Morgage_Confused

From Barclays..

Mortgage Current Account with Reserve Facility – what is it?

A Mortgage Reserve is a secured overdraft facility on a Mortgage Current Account, where you borrow against the equity in your home. It allows you to draw down money from your agreed available limit, to do pretty much anything you like – from revamping your kitchen to paying for your holiday. We no longer offer a reserve facility to new mortgage applications although there are a number of existing customers who have a reserve facility on their mortgage account.

Morgage_Confused

Strange thing occurred on the way to offsetting.
My reserve limit seems to have been transferred over aswell. So I have a reserve account aswell as my offset. Very confusing it shows a hefty negative number. I am assuming I can whip it out into my current account and the figure will approach zero as I do so and not go more negative?

getmore4less......is this what you mean about running the offset effectively as interest only. I can just grab back the capitol paid from this "reserve account" at basically the offset rate of interest.