Offset vs Fixed

Runders

Hi all,

Just wondering what the thoughts are at the moment on a variable offset mortgage Vs a 2 year fixed?

The 2yr fixed is 1.79% with £110 fees - penalties if you leave
The offset is 1.85% with £1200 fees - no penalties if you leave

I have about 9k in savings at the mo, but I always overpay my mortgage by anywhere from £250 to £500 each month, and managed to overpay by 6k in total over the last 2 years. I also put at least £250 a month into savings, but often top these up with the odd £10 here and there from ebay etc. I also work at sea and on the months I am away I can just put my wages straight into the savings account, which after my bills etc. have come out is about £1000.

I find the offset an attractive option despite the fees, I like the fact that if an emergency were to occur, such as the boiler breaks or the roof needs doing, then the money is there and available. I also like that my savings are working to reduce my mortgage interest. I am however a little wary of being on a flexible rate, especially with all the uncertainty in the markets with Brexit. I realise I could just swap to a fix if the interest rates were to rise, but there is the initial outlay of fees to consider.

Any thoughts would be appreciated.

Thanks guys!

TrickyDicky101

Is the offset fixed for a period of time or is it variable - then offset linked to? BoE Base Rate or something else. Is it a discounted rate for a period of time (eg 2 years) or permanently at X% over whatever it is linked to?

getmore4less

How big is the mortgage what is full term.

You can get better rates on the savings than the mortgage so to start you won't be offsetting anyway and overpayments would go into savings.

Whats the fees/rate on the best tracker that may be a better option than the offset as you can just save the surplus and make a little bit of money on that with a bit of work.

how long before a major change like changing house?


I have an offset but you could get free money on Credit cards(£10k multiple called stoozing) and the rates were very different.
A good tracker rate(offset or not) is a good long term option to consider(everyone seems to focus on fixed) and often will bette than serial fixing.

I am however a little wary of being on a flexible rate, especially with all the uncertainty in the markets with Brexit.

If you really think rates are going up then a 2y fix won't protect you.

Runders

Thanks for the responses

TrickyDicky101, the rate is set by Coventry BS itself (SVR) and has no timescale attached other then when the BS makes a change.

Getmore4less, the mortgage is for £100k over 23 years.
I am not sure on the best rates for trackers so will have a look into that.
Also no timescale on when I may move, I am looking at other job opportunities which may play a factor, but at the moment I am quite happy where I am.

getmore4less

The 2yr fixed is 1.79% with £110 fees - penalties if you leave
The offset is 1.85% with £1200 fees - no penalties if you leave

mortgage is for £100k over 23 years

paying £450pm
in two years you owe

£94,018 offset
£92,769 fixed