Offset confusion

Claire2_2

I've been reading lots about offsets on the board and on the site, but I'm getting myself a little confused - I wonder if anyone can help?

We currently have a £160k mortgage (58% LTV) with Portman at 6.5%, paying about £1200 a month over 21 years - I know we can get better than that, so I'm looking around.

I'm hoping to be debt free by the end of this month (hurrah!), and I think I can overpay by about £500 a month, with a lump sum over payment of about £3k once a year (Another £3k will go into a cash ISA).

I currently have some savings in the form of some shares, but no other lump sum.

I've seen an Intelligent Finance offer of a 3 year discounted mortgage with an additional monthly sum of £1120, moving to 6.37% (or equivalent, depending on base rate at the time) in 2010. It has an APR of 6.3%

I think this sounds reasonable (though not too impressed with the fees!). Before I shop around offsets more, does this sound like a reasonable thing to do given:

- I don't have the 50% savings:mortgage value it suggests makes an offset worthwhile
- Some months I won't want to pay the full £500 overpayment, so having a shorter mortgage term would be too rigid
- Most mortgages don't seem to offer regular overpayments
- I'm a higher rate taxpayer, so I don't think I could find a savings account at the rate I need

Is there anything else I need to consider?

I really appreciate any pointers on this - off to pay my dues on a thread where I might be able to give advice!

Trying_to_be_good

Most mortgages DO allow regular overpayments - sounds like you'd be better off with a normal mortgage that allows them than an offset as you don't have enough savings to make the higher interest rates they charge worthwhile.

cm233lh

Hickley and Rugby offer a better lifetime tracker rate and give you an option to offset your savings account, plus a cap for a couple of years (which could be a good safety net the way things are looking today!) Their website's not such a fun colour though, and you don't get to offset your current account, so you'd have to be more disciplined in where you put your spare cash.
If you're going for IF, I think they do an even cheaper deal over the long term - real costs depend on how much you think you can clear in the first 3 years.

Claire2_2

Thanks for your help both of you - I shall continue researching my options!!