New Offset mortgage vs. Standard repayment renewal, just before moving house

tobysnooker

My mortgage is up for renewal, just before we are planning to move house. Our house is on the market and we have identified one or two decent candidate properties to move to, but are in no rush. Ideally we should be switching mortgages in late August at the end of a 2-year fixed rate, to avoid reverting to a very unfavourable rate of about 3.99%.
Basic facts: Current house is valued at 650k, with 330k remaining. We have about 200k in liquid assets (100k cash and 100k easily convertible). Candidate properties are in the 1m-1.8m range
I've never looked in to offset mortgages before, so I'm not familiar with the restrictions they may impose regarding paying off the mortgage whilst moving house, or if the application process is complex. I'm particularly keen to minimise or eliminate early redemption fees and / or be able to transfer to a new property. I believe we will decimate our savings on moving house (stamp duty and renovations), but expect savings to build up fairly quickly afterwards.
Given this scenario, does there exist an offset mortgage that would work better for us verses a fixed rate repayment mortgage?

getmore4less

I would be focusing on lender with low/no erc  and porting options to new borrowing levels. 
Your new borrowing will be in the £500k-£1.4m range.

Offsets tend to cost more not sure they will help much in the short term

Trackers may be a better option with no ERC. 

Which lender are you with now? 

tobysnooker

Thank you for the advice, which is well received.
We are with First Direct at the moment.

getmore4less

2.09% £490 fee, lifetime tracker no exit fees.
Use that to benchmark the options.
Is FD going to lend to you at the new level required?

Thrugelmir

tobysnooker said:

Given this scenario, does there exist an offset mortgage that would work better for us verses a fixed rate repayment mortgage?

The offset mortgage may well be on a repayment basis. Interest only mortgages are far harder to find these days. 

dimbo61

I think Offset mortgages are brilliant as you can keep your savings in the offset account and dip in and out when needed while at the same time reducing the interest you pay on your mortgage and all tax free.
I would however only consider a tracker with your existing lender unti you have found your new Million pound home.
Making use of a good local whole of market mortgage broker would be money well spent.
In the current climate having a large savings pot is no bad thing 

getmore4less

offsets have changed over the years
The margins have gone up,  fees tend to be higher and many are now are fixed terms.
FD used to have margins as low as 0.1% look at FD options now  for 50% LTV the fees are the same £490 

Offset cheapest is 2.43% lifetime tracker.
The regular  2.09% lifetime tracker or 1.34% 2y fix. 1.49% 5y fix
With 0% interest on savings(the % go up with savings interest) 
for the tracker rate you need 14% offset for the 2y fix 45% offset

depending what the OP investment/savings are doing the FD  offset may be OK if they stick with them
portable up to £1m  and is on an I/O basis so offset savings will climb quickly

tobysnooker

Thank you for all this useful advice and good information. I've spoken to Barclays and First Direct, but soon bumped up against their restrictions on providing advice (versus simply taking action on a request). So I've now reached out to a whole of market mortgage advisor to take things further.