offset morgage help

cheepskate_2

Hi All

Been looking at the offset morgage pages.

Our initial plan was to get 12 y morgage for a 39000 morgage , paying about 380 per month.

But wondering if anyone can help or direct me to a calculator that can do it for me.

If i can borrow (interest free) the 39000 form my sister and put it into a offset morgage . how would this reduce my payments and to what?

Many thanks

Martinslovechild

If your outstanding mortgage balance is £39,000 and you offset this with £39,000 from your sister, then your effective balance is NIL.

Therefore, no payments will be made unless you gradually reduce the offset fund. I would therefore suggest keeping the offset fund £500 below your outstanding mortgage balance, i.e.

Mortgage Balance = £39,000
Offset Fund = £38,500

After the first month, your payment of £380 is collected, so you'll now look like this:-

Mortgage Balance = £38,620 (plus a tiny bit of interest)
Offset Fund = £38,500

To ensure that the bank can collect the following month's payment, you'll need to reduce your offset fund by the same amount or higher (i.e. pay your sister back £380), i.e.

Mortgage Balance = £38,620 (plus a tiny bit of interest)
Sister Payment = Withdraw £380 from Offset
Offset Fund = £38,500 minus £380 = £38,120

Each month, assuming your payments are always £380, your offset fund will need to be reduced by the same amount (i.e. you'll need to set up a monthly transfer from the offset fund back to your sister's account) - this ensures that:-

1. You'll never pay interest on more than £500 of your mortgage
2. You'll always have payments collected.

cheepskate_2

a bit more complicated than i thought by just putting the money in


many thanks for taking the time to answer

silvercar

take a 39000 mortgage, put 39000 in the offset and you don't need to make any payments.

If you actually make payments of your suggested amount of 380 you will reduce the balance of 39000 each month. After about eight and a half years you will have repaid the mortgage and can give your sister her money back.

noh

If your sister is willing to loan you the £39000 interest free which is very generous of her. This is what I would suggest:-
Take out an interest only £39000 offset mortgage offset it with the £39000 loan from your sister. Pay £270.83p per month to your sister and after 12years you will have paid her the loan back. If for any reason she needs the money back early you can at any time withdraw the required amount from the offset account and pay her. Your monthly payments to your mortgage account would then need to rise if you want to keep the term the same.

Nigel

UK007BullDog

Try the NatWest Offset calculator on their website.

http://www.natwest.com/personal02.asp?id=PERSONAL/BORROW/MORTGAGES/FLEXIBLE_OFFSET_CURRENT/OFFSET_FLEXIBLE

sweet_jasmine

if you have 46k in savings and a 67k mortgage would you recommend an offset??:o

thanks