Offset mortgage - worried man

shawie60

Hi Guys in 2013 I posted asking for advice on our offset mortgage as below .. offset mortgage, advice please Hi Guys, I need a little advice if I may.
We have a Offset mortgage with first direct which we’ve been paying without problem for about 7-8 years. Each time I get a statement it says its interest only which concerns me in case I still have a large amount to pay on the mortgage at the end of the term. Each year I ring up to check whether this is the case and each time I’m told no it will be repaid and they have to state that because its partly a loan or something , but to be honest it worries me as we don’t have any endowments or anything else etc in place to cover it if it isn’t.
My question is will there be extra to pay once my 15 year term is up and we continue to pay as we have been doing or will the mortgage be settled and the property ours ??
As I say I've queries this every time I get the statement and on each occasion I've been told the mortgage will be paid in full but from what I've read I doubt that.
a couple of people were kind enough to respond and put my mind at ease. see link please .. https://forums.moneysavingexpert.com/discussion/4743811

However after hearing the news this morning I find that the advice given in good faith may not be right, and that we will still have our mortgage total (currently £23,400) to pay. Im concerned because like a lot of people (quoted at 40% + on the news at the moment) we dont have a facility or cash in place to pay that. Any advice would be greatly appreciated. We currently have a offset loan balance of £5379. and a offset morgage balance at £23400.
many thanks
glenn

AnotherJoe

You say you have £23,400 to pay.
How much did you have to pay in 2013?
Do statements show the amount reducing before and since then?
What is your monthly repayment, and what is the interest rate?
What is your plan to repay the £5379?

ACG

When does your mortgage end? I am assuming 2021?
How much are you paying each month?
What interest rate are you paying?

getmore4less

Are you still paying £500pm?

if you are and say 1.5% still thats

£28779 1.5% £500pm paid of in 5 years.

Rodders53

At start of term 15 years you had a total loan of £46k (23,400 mortgage + 22,600 improvement loan).

Now, today, the the total owed is as stated by getmore4less... the improvement loan being reduced first by the mortgager in statements, likely by next year will be near zero.. Then the mortgage figure will be reducing on future statements.

You are roughly 10 years in and in another 5 years will be mortgage free.

zagubov

If you have a good steady income, you can contact them and re-mortgage onto a fixed-rate repayment mortgage, which may be more reassuring for you. It would future-proof your payments too if you're on variable rate, as rates may rise in the next few years..

With five or less years left to finish the term, you may struggle to find other banks that are interested in your custom, but a mortgage broker could probably help.

The offset usually charges a higher interest rate than a repayment mortgage. If you use the tool over the main forum you'll see they do deals like fee-free 2.08% which may be better than you're getting. Have a snoop around then contact the bank.

AnotherJoe

zagubov wrote: »

The offset usually charges a higher interest rate than a repayment mortgage. If you use the tool over the main forum you'll see they do deals like fee-free 2.08% which may be better than you're getting. Have a snoop around then contact the bank.

In their other thread the OP says their mortgage rate is 1.5%.

AIUI now, the issue is a simple misunderstanding of how payments are allocated against loan and mortgage. They had a mortgage of £23k and added to that another loan of about the same.

The statements show the mortgage as staying the same amount and the loan coming down. The key thing is, once the loan is paid off (and at £5k left and £500 a month being paid thats only about another year) then the mortgage will start to come down. At £22k owed and £500 a month paid thats under 5 years.

So the OP is worrying just because of the way the lender allocates the payments. Loan first and then mortgage. Hence until loan is paid off, mortgage will stay as was.

getmore4less

I suspect it might be 1.25% now, did FD follow the base rate down?

zagubov

AnotherJoe wrote: »

In their other thread the OP says their mortgage rate is 1.5%.

AIUI now, the issue is a simple misunderstanding of how payments are allocated against loan and mortgage. They had a mortgage of £23k and added to that another loan of about the same.

The statements show the mortgage as staying the same amount and the loan coming down. The key thing is, once the loan is paid off (and at £5k left and £500 a month being paid thats only about another year) then the mortgage will start to come down. At £22k owed and £500 a month paid thats under 5 years.

So the OP is worrying just because of the way the lender allocates the payments. Loan first and then mortgage. Hence until loan is paid off, mortgage will stay as was.

[STRIKE]That was years ago, and sounds like a fix - their current offset SVR is 3.69%.[/STRIKE]

OK learned later on that this was a long-term low rate so the re-mortgaging might not help unless rates take off.

getmore4less

When the op took out his offset I recall FD offsets being base rate life time trackers not the current trend of short term deals.

AnotherJoe

zagubov wrote: »

That was years ago, and sounds like a fix - their current offset SVR is 3.69%.

[STRIKE]Fair enough I missed that in which case you are bang on..[/STRIKE]

Edit : It seems not for the OP