Is offset worth the hassle?

littlebitconfused

Due to remortgage soon. We've been offered a good 5-7 year fixed rate which will free £300 from our current mortgage so plan to overpay if possible- this'll cut our 15 year mortgage by 2 years :T if that were to continue (depending on future deals etc...)

We have regular salaried income and also run a business which we save tax cash from on a monthly basis.

Question is- Is trying to offset as well as overpay worth it in these circumstances and use the tax savings as the offset capital? Basically the account will go from 0 to perhaps 30k and empty every six months when tax is due. Its never going to be a larger sum sitting there for years.

Am I over complicating things as offset rates arent as good as straightforward fixed?

Any advice gratefully accepted.

amnblog

Offsetting savings against your mortgage interest is not the only advantage of an offset mortgage.


We have many self employed clients who build up the offset account to 'overpay' their mortgage knowing that the cash is still there if they need to access it in the future.


I have seen borrowers where their offset account holds the same sum as the balance on their mortgage but they prefer to keep it that way then let go of the cash balance.

dimbo61

I think Offset mortgage are a great idea for self employed people as its a safe place to keep spare money.
We had a barclays offset mortgage and had several accounts offsetting the mortgage.

Tom99

You pay a higher rate for an offset so put some figures in a speadsheet about your credit balance and see how they compare.

littlebitconfused

Thank you for the replies.

As the sums weren't huge and generally will increase incrementally 0->5k->10k etc up to 6 months I wasn't sure if it was worth the potentially higher rate.

not sure Im excel capable enough to work work out the sums in all honesty!

Tom99

littlebitconfused wrote: »

Thank you for the replies.

As the sums weren't huge and generally will increase incrementally 0->5k->10k etc up to 6 months I wasn't sure if it was worth the potentially higher rate.

not sure Im excel capable enough to work work out the sums in all honesty!

[FONT=Verdana, sans-serif]If you set aside the same each month you can probably guesstimate the average at about half your balance at the end.[/FONT]
[FONT=Verdana, sans-serif]That will give you a ball park figure of the extra/saving you might make re interest.[/FONT]

littlebitconfused

Tom99 wrote: »

[FONT=Verdana, sans-serif]If you set aside the same each month you can probably guesstimate the average at about half your balance at the end.[/FONT]
[FONT=Verdana, sans-serif]That will give you a ball park figure of the extra/saving you might make re interest.[/FONT]

Did the calculation/guestimation. Basically itll save me 2 months mortgage payments over 15 years.

Problem is I have a deal transfer offer from my current provider which can be taken now, in theory without all the rigmarole of valuations and delays and Il probably end up at a higher rate which makes it less likely I'll see that gain.