Offset mortgage and 2 year deals

bloolagoon

I'm considering FD 2 year offset fee saver.

Current mortgage balance is 43,000 with current accessible savings of around £70,000. I plan to borrow £125,000 to cover renovations.

The plan is each payment instalment I make I will take from savings to top up the offset savings so the balance should be 0 interest. I don't think I will need all of £125,000 but if it's interest free then easier to have as a back up. If I use it I will look at selling shares or paying the interest - depending on what is best at that time.

What happens at the end of a 2 year fix? Does it stay offset at SVR or do you lose offset?

Also as its interest only how do you repay capital. We currently OP by £1000 a month so do we just put this into another account

getmore4less

If borrowing £125k and current debt is £43k just offset £43k of the savings

net borrowing zero, no interest, no payment.

Use the savings to pay for the renovations and any extra from income.

when that runs out dip into the offset account.

If savings earning more net that the mortgage then save and use the savings interest to pay the mortgage interest .

getmore4less

Depending where you end up the rate may not be that important so there may be a better deal out there.

bloolagoon

getmore4less wrote: »

If borrowing £125k and current debt is £43k just offset £43k of the savings

net borrowing zero, no interest, no payment.

Use the savings to pay for the renovations and any extra from income.

when that runs out dip into the offset account.

If savings earning more net that the mortgage then save and use the savings interest to pay the mortgage interest .

That's the plan but I don't know how you repay if it's interest only - is it a separate account?

Can you stay as offset at the end of 2 years or do you move to a normal mortgage?

Also we have income protection to cover mortgage - how does this work for offset?

I'm trying to work out if this is the best way or whether to just do a regular mortgage and use most savings and pay interest.

bloolagoon

getmore4less wrote: »

Depending where you end up the rate may not be that important so there may be a better deal out there.

I chose FD as its fee free and most others charged a fee but will look more as the interest rate shouldnt matter as it should always offset.

getmore4less

You are asking about products none of us can know anything about like your protection policy.

read YOUR terms on what it will pay.


With interest only the standard way is to pay off the debt at end of term,

if 100% offset those funds will do the job.