Offset paid in full

potts8

I'm just curious how many of you offset account owners closed your accounts or kept them open and why?

I'm in the position that my offset account is fully paid and I have kept this open for a couple of years as a method of easy credit if I need it.

I now have enough savings if I do need an emergency fund and the current rate on my offset(3.69%) is higher than a loan if I did need the cash.

My options now are to either close the account or keep it open change change products to a 2.79% account should I wish to lend from it.

The temptation to close it and be done with is strong but it feels like the smarter option would be to keep it open at a lower rate than a loan fee.

Are there any other pros/cons to this scenario, anyone done anything similar?

getmore4less

benefits - but that issue is les of a problem when you have also built up other assets.

The main advantage is you don't have to ask for the money, so can use it immediately where as a loan may take time and can just be paid into the offset so the higher rate is only a temp problem as long as you can get the loan.

If portable it can make moving a bit easier.

if the move to a lower rate I free then take it anyway while you decide what to do.

dimbo61

You are fully offset so it does not matter if the rate is 3.69 or 20 percent !
You can dip into this account if you need money for a big purchase IE new car, big TV, etc

potts8

dimbo61 wrote: »

You are fully offset so it does not matter if the rate is 3.69 or 20 percent !
You can dip into this account if you need money for a big purchase IE new car, big TV, etc

But if I dip back into it lets say 15k then I'm -15k on the mortgage which I will then start paying 3.69(or 20%) on the 15k.

Apologies if it's me that misunderstanding but that's what I'm lead to believe.

dimbo61

Yes you do but it is often quicker and cheaper than applying for a loan.
You can quickly replace the money you have borrowed and you are not limited by the terms and conditions of the loan.
You can often negotiate a discount when buying an expensive item, Car/Caravan etc if you have the cash in the bank so to speak.

MallyGirl

I will certainly be keeping mine once it is fully offset next month. The ability to borrow instantly and pay back completely flexibly is worth a lot.

havingaball74

When you have made your offset mortgage off, do people then move the balance to general investments/savings accounts? I ask because I am interested in an offset mortgage. I have a large lump sum sitting in premium bonds at the moment but am considering setting up an offset mortgage (the complication comes because the savings are mine but I have a joint mortgage.)
What happens if, after 2 years, you want to revert to a 'normal' fixed rate repayment mortgage?

AnotherJoe

When i got to 5 years and £10k left I closed it. Could have left it until it ended, as I did think about using it for a car loan but then most of the deals i was looking at were 0% so i thought i might as well have one less thing to manage (and one less temptation ....hmmm a Tesla at only 1% interest .....hmmm)

Had it had say 15 years to run I would probably have kept it going.

Havingaball, regards "reverting" to a standard mortgage you'd just have to take out a new mortgage it doesn't morph between types (or at least, my barclays one didn't)

havingaball74

Sorry to jump on the thread, but my current interest rate is 2.74% and I have savings of 90k (me 75k and my partner 15k). Is an offset mortgage something that is worth looking into? Or is it better in a savings account?

getmore4less

With some lenders you can have a joint mortgage and individual offset savings accounts.

Barclays also allow you to build up ISA funds which can be handy later.

AnotherJoe

havingaball74 wrote: »

Sorry to jump on the thread, but my current interest rate is 2.74% and I have savings of 90k (me 75k and my partner 15k). Is an offset mortgage something that is worth looking into? Or is it better in a savings account?

You are never going to get 2.74% on £90k. And most especially not tax free. No brainer if you dont have the stomach for the stock market or this is your (very large) emergency fund.