offset v overpayment

malc_b

Nobody seems to have asked the question, is there a penalty to repay early (which is what the OP says they want)? AFAIR my mortgage, offset, tracker, cashback has a penalty if I pay it off early. Maybe that has changed as I'm sure they'd like to get rid of this mortgage which is at 1.25% :-) .

wildcherry

Good Morning all,


Thank you for all the advice. It seems fairly clear that if we're not planning to pay off early (there is a charge), then to put any spare cash we have in the offset account is the way forward.


Thanks, once again.

silvercar

jamesd wrote: »

While this means that the offset account normally wins there is a possible catch. The money in the offset account is vulnerable to benefits means tests. Money overpaid on a mortgage account normally isn't. In the short term this would make little difference but it may matter if you were to be injured or ill and unable to work for many years or even decades.

Again it depends on the lender. Some show offsets as a net mortgage, others as a mortgage + linked savings. If you have the former I suspect the benefits people would struggle to say that a net negative balance should be considered as savings.

AnotherJoe

wildcherry wrote: »

Good Morning all,


Thank you for all the advice. It seems fairly clear that if we're not planning to pay off early (there is a charge), then to put any spare cash we have in the offset account is the way forward.


Thanks, once again.

It depends on the rate of interest in the savings account. You may be able to get a better rate outside the linked account, indeed I expect you could unless Santander do an offset which I don't think they do ?

jamesd

silvercar wrote: »

Again it depends on the lender. Some show offsets as a net mortgage, others as a mortgage + linked savings. If you have the former I suspect the benefits people would struggle to say that a net negative balance should be considered as savings.

In this case we have been told that there is an offset savings account so we can reply specifically about the potential issues with those.