Mortgage Advice Wanted

Sinx

Anyone got anygood ideas. I want to buy a house for 250000 and have 300000 in the bank. Any good offset type deals so I can keep my 300000?

brightbuy

Hi Sinx,

If you want to discuss mortgage options you will have to approach an advisor privately. This forum is very strict on how advisors can offer help or advice through the threads.

In general terms:

Have a sit down and work out whether you will be better off by seperating your savings from the mortgage. You could purchase the house worth £250,000 by using £37,500 of your £300k for a deposit (15%) on a normal mortgage. By doing this you will have £262,500 available to invest elsewhere. By splitting this remaining money up into chunks and opening several high interest savings accounts (like the ones that Martin mentions on this site) you could find you will be better off.

You will most often find that you will earn more interest through a high interest savings account. So while you are earning more money on your savings you are using the lenders money to your advantage.

For example: If you spread your risk you should find that some of the best everyday interest accounts will pay around a variation of 6.0% on your £262,500 whilst using the services of a good broker could get you a mortgage rate of around 5.79% for your loan of £212,500.

This means that whilst you could be paying £1025.31 for your mortgage payments per month you will also be getting £1312.50 (before tax) on your savings.


Hope this helps!



Please note that these comments are my opinion only and there may be several other cost factors to be considered!

PasturesNew

What benefits do you see to doing this?
With a mortgage you will be paying arrangement fees etc.

What are you hoping to gain/avoid by doing it this way?

I appreciate there can be benefits ... but I'd want to know what you're after to be able to evaluate it.

silvercar

If you stick the money in an offset so the mortgage is fully offset, you will not need to pay any interest on the mortgage and your savings will be intact shoulld you need them. The downside is that you won't get any interest on your savings but you have to compare the net interest you could have on your savings against the gross mortgage rate if you borrowed the money.

Sure you could get a higher interest rate (possibly) but you would need to be dividing you money up according to the investments allowed, constantly monitoring your interest rates and trying to minimise the time the money is being transferred between accounts and not gaining any interest.

Remeber for a higher rate tax payer savings offsetting a mortgage at 6% would need to be getting 10% in a savings account before tax.