We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Interest only, offset tracker mortgage
Options
Comments
-
Cyberman60 wrote: »All savings offset against the mortgage are netted tax free, thus if the interest rate is 4% you are effectively getting 4% after tax on your offset savings/salary etc
This is a myth what you are doing is borrowing less.0 -
getmore4less wrote: »Someone recently let slip during the process that they will be inheriting some money quite soon, mortgage interview stopped, not going to lend.
Was any rational reason presented for this?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: »Was any rational reason presented for this?
Obvious, they could pay the mortgage off so lender would not make any money.0 -
getmore4less wrote: »Obvious, they could pay the mortgage off so lender would not make any money.
Other than the up front fee and all the interest if the mortgage wasn't paid off.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 -
getmore4less wrote: »
No offset, and repayment rather than interest only, but the rate certainly makes up for the lack of flexibility. Thanks.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 -
Cyberman60 wrote: »It's a no-brainer IMO. I have an offset and only wish that I'd had one from the start.
All savings offset against the mortgage are netted tax free, thus if the interest rate is 4% you are effectively getting 4% after tax on your offset savings/salary etc.
With the house prices rising inevitably as they do over time due to extra demand thanks to immigration, BTL demand etc, a repayment mortgage is not necessary IMO as the mortgage can be cleared by making overpayments as salary increases, lump sums from pensions, ISAs etc. Also, if you move a few times, repayment mortgages become a more expensive waste of time.
The flexibility of offset mortgages cannot be overstated. :T
And repayment offset mortgages?
Regardless of how 'pointless' anyone thinks repayment mortgages are, it's what the lender thinks that matters, and post-MMR the vast majority think that repayment mortgages are essential for residential funding, unless you meed extremely specific criteria. If you do, great, but it's by no means a given that you can just 'opt' for an interest only mortgage, as you would have done pre-2008.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 -
Mortgage_Mark wrote: »it's by no means a given that you can just 'opt' for an interest only mortgage
Yes, it's not like we're the customers or anything!
Anyway, I do value all the input I'm received here, even if it doesn't always come across that way. Fortunately I gave the spreadsheets another rattle last night and this will be easier than I thought to do without needing a mortgage on day one, nor having to ditch any investments that we can't easy reinstate later down the line (no shares, ISAs nor NS&I linkers need selling).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 -
By the way, what are acceptable repayment vehicles for interest only? From the above, already having enough in investments and/or possible pension lump sums could actually work against us!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: »By the way, what are acceptable repayment vehicles for interest only? From the above, already having enough in investments and/or possible pension lump sums could actually work against us!
This varies from lender to lender. What is acceptable for one may not be for another. Traditionally the reason would be 'sale of the property' however unless you're buying a BTL property, this is now not an acceptable strategy, as you'd technically have to make yourself homeless in order to repay.
Another common one, particularly with offset products, is that clients will make overpayments to repay the capital. Another one that you'll struggle big time with, as this is by no means guaranteed, and a change in your financial circumstances could mean that you are unable to make these overpayments, and thus end up having to sell, as per the above.
Oh, and the 'not like we're customers' thing - the big changes around affordability were actually brought about with customers in mind, making sure that customers can reasonably afford any potential mortgage, and can afford to repay that mortgage from their income, rather than having to rely on selling etc to pay their mortgage and keep their home. Understandably there will be reasonably affluent people who are fortunate enough to want to look at interest only/offset/overpayment combinations, however for the vast majority, the recent affordability changes have been a change for the better, for sure. Although initially lenders took that a bit too far - a couple of clients of mine had been in to branch and had been asked how much they pay to get their milk delivered....another had been asked how much it costs to feed their cat! A bit overkill...!
Regardless, the best of luck to you and hopefully you can find the right solution for you and your daughter.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
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 351.2K Banking & Borrowing
- 253.2K Reduce Debt & Boost Income
- 453.7K Spending & Discounts
- 244.2K Work, Benefits & Business
- 599.3K Mortgages, Homes & Bills
- 177.1K Life & Family
- 257.7K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.2K Discuss & Feedback
- 37.6K Read-Only Boards