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Interest only, offset tracker mortgage
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gadgetmind
Posts: 11,130 Forumite
We want to raise funds to help daughter buy a small house. She'll have lodgers that will cover her interest on the loan we'll make her but we're looking for a small mortgage against our home to avoid having to deploy rainy day cash or to sell any shares or NS&I linkers.
First Direct have a good interest only tracker that's base+2.29% and we could offset a fair bit of this.
Are there any other lenders we should consider, or perhaps a broker? Hitting google or the various mortgage web site is frustrating as many assume repayment mortgages.
First Direct have a good interest only tracker that's base+2.29% and we could offset a fair bit of this.
Are there any other lenders we should consider, or perhaps a broker? Hitting google or the various mortgage web site is frustrating as many assume repayment mortgages.
I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
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Why interest only? Absolute nightmare for residential funding.I am a mortgage adviser.You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0
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Well, happy to look at alternatives, but the flexibility of the offset (and I now notice that Barclays allow cash ISAs to offset) seems better than some fixed amount per month off the loan.
In fact, the Barclays interest only Lifetime Offset Tracker at base + 1.79% looks hard to beat. The £1k up front in fees seems stiff, but that's soon paid off by the lower interest rate.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
Why specifically interest only instead of repayment though? The offset part is a different animal, you can get many offset products that are on repayment mortgages?
I've never seen a massive appeal to an offset interest only mortgage, if the idea is to offset interest and reduce the loan...then why interest only?I am a mortgage adviser.You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Flexibility. We can choose to lodge more cash (perhaps even in ISAs) at any point, or reduce it if we see opportunities elsewhere. However, the small mortgage we did (very past tense) on current property was on a 10 year repayment mortgage, so I'm not anti to them.
Anyway, let me reverse the question. What advantage is there is a repayment mortgage to us? What does it let us do than an interest only offset doesn't?I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
gadgetmind wrote: »
Anyway, let me reverse the question. What advantage is there is a repayment mortgage to us? What does it let us do than an interest only offset doesn't?
The starting point for lenders is the plan as to how the capital debt is going to be repaid. If it's not a repayment mortgage what is the vehicle going to be. Over 96% of new mortgages are now repayment. So repayment is the new norm. Not really a question of the advantages to you as such.She'll have lodgers that will cover her interest on the loan
If lodgers are required to cover the interest. Sounds as if finances are limited.0 -
Thrugelmir wrote: »Not really a question of the advantages to you as such.
Well, obviously I disagree.
The loan will be repaid either because, 1) daughter qualifies as a Doctor and gets a mortgage in her name, 2) she sells the house, 3) something else.
Of course, if we can get an offset mortgage on repayment terms that's cheaper and as flexible as interest only, then I'll be interested to take a look.If lodgers are required to cover the interest. Sounds as if finances are limited.
Well, she's a student, so doesn't have a lot of money. However, her interest payments to us will be about £200pcm, and currently herself and her two friends pay £70pw each for a cold and damp s-hole. Even with some other bills, she's got the interest payments to us covered and some.
If she can afford to overpay us, we can put the extra into the offset account or (less flexibly) use it towards a repayment mortgage.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
You are running off on the wrong direction Gadgetmind.
Barclays have tricky criteria to obtain interest only which includes +£75,000 income and £300,000 equity, plus no lending into retirement.
Your daughter then getting lending as a student is another conundrum.
You should consult a good independent broker about this situation.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
How much are you looking to borrow? I was under the impression interest only products were very restricted availability now and only to those with significant income who were looking to borrow substantial sums (not sure if this applies to offset mortgages too)?0
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Barclays have tricky criteria to obtain interest only which includes +£75,000 income and £300,000 equity, plus no lending into retirement.
None of that is a problem.
Well, it looks like I might have to as the soonest anyone in a Barclays branch is available until March 30th.You should consult a good independent broker about this situation.
Any recommendations? :-)I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
TrickyDicky101 wrote: »How much are you looking to borrow?
£100k against a mortgage free home worth £750k to £800k.only to those with significant income who were looking to borrow substantial sums (not sure if this applies to offset mortgages too)?
Well, if they insist that I borrow more, I'll just shove it straight back into the offset account. I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0
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