Interest-only/ Offset Mortgage

68ComebackSpecial

silvercar said:

I won’t complain because I have a tracker interest only offset, tracking at base +0.5% for the life of the mortgage, but the savings are held in a separate pot. If you use that point to reduce your outstanding mortgage balance, you can’t get the money back. The upside is that the minimum monthly repayment is the interest on the difference between the mortgage balance and the savings pot.

Ours is a repayment offset tracker (base +0.85%) and any capital repayment, either via monthly repayments or lump sum additional ones, leads to an equal increase in the mortgage reserve account. So we could pay off a major lump sum now and then later draw the money back down and we could also choose to reduce the monthly payments to reflect the lower balance or maintain them to shorten the term. As it happens we paid off the majority of the mortgage after seven years but have left a balance of just over £1k, with a monthly payment of about £16, so that we can retain access to the sizeable reserve for the remainder of the term. My sister actually took out the same product six months after us and has a rate of base +0.35%.

silvercar

68ComebackSpecial said:

silvercar said:

I won’t complain because I have a tracker interest only offset, tracking at base +0.5% for the life of the mortgage, but the savings are held in a separate pot. If you use that point to reduce your outstanding mortgage balance, you can’t get the money back. The upside is that the minimum monthly repayment is the interest on the difference between the mortgage balance and the savings pot.

Ours is a repayment offset tracker (base +0.85%) and any capital repayment, either via monthly repayments or lump sum additional ones, leads to an equal increase in the mortgage reserve account. So we could pay off a major lump sum now and then later draw the money back down and we could also choose to reduce the monthly payments to reflect the lower balance or maintain them to shorten the term. As it happens we paid off the majority of the mortgage after seven years but have left a balance of just over £1k, with a monthly payment of about £16, so that we can retain access to the sizeable reserve for the remainder of the term. My sister actually took out the same product six months after us and has a rate of base +0.35%.

So mine is similar. If I keep money in the savings pot, it reduces the interest the minimum interest I have to pay each month. I can take back from the savings account any time I want. I also have the option to permanently reduce the mortgage by using that pot to reduce the mortgage. No point doing this at all, as once done it can’t be undone and having money in the pot reduces the interest charged.
As far as I can see the difference between my mortgage and yours is only the size of the minimum payment, by having an interest only mortgage I don’t have to make any capital payment each month. (Obviously by the end of the term, I have to repay the whole lot, so building up the savings pot is sensible.)

getmore4less

68ComebackSpecial said:

silvercar said:

I won’t complain because I have a tracker interest only offset, tracking at base +0.5% for the life of the mortgage, but the savings are held in a separate pot. If you use that point to reduce your outstanding mortgage balance, you can’t get the money back. The upside is that the minimum monthly repayment is the interest on the difference between the mortgage balance and the savings pot.

Ours is a repayment offset tracker (base +0.85%) and any capital repayment, either via monthly repayments or lump sum additional ones, leads to an equal increase in the mortgage reserve account. So we could pay off a major lump sum now and then later draw the money back down and we could also choose to reduce the monthly payments to reflect the lower balance or maintain them to shorten the term. As it happens we paid off the majority of the mortgage after seven years but have left a balance of just over £1k, with a monthly payment of about £16, so that we can retain access to the sizeable reserve for the remainder of the term. My sister actually took out the same product six months after us and has a rate of base +0.35%.

That sounds like(or is) Barclays way of doing it

You convert the savings into an over draft limit  by overpaying the mortgage, you can cycle the money through the mortgage to get it near 100% as an overdraft and run it like a CAM mortgage,  great forthose that might need benefits at some point  no savings but access to the money.

silvercar said:

68ComebackSpecial said:

silvercar said:

I won’t complain because I have a tracker interest only offset, tracking at base +0.5% for the life of the mortgage, but the savings are held in a separate pot. If you use that point to reduce your outstanding mortgage balance, you can’t get the money back. The upside is that the minimum monthly repayment is the interest on the difference between the mortgage balance and the savings pot.

Ours is a repayment offset tracker (base +0.85%) and any capital repayment, either via monthly repayments or lump sum additional ones, leads to an equal increase in the mortgage reserve account. So we could pay off a major lump sum now and then later draw the money back down and we could also choose to reduce the monthly payments to reflect the lower balance or maintain them to shorten the term. As it happens we paid off the majority of the mortgage after seven years but have left a balance of just over £1k, with a monthly payment of about £16, so that we can retain access to the sizeable reserve for the remainder of the term. My sister actually took out the same product six months after us and has a rate of base +0.35%.

So mine is similar. If I keep money in the savings pot, it reduces the interest the minimum interest I have to pay each month. I can take back from the savings account any time I want. I also have the option to permanently reduce the mortgage by using that pot to reduce the mortgage. No point doing this at all, as once done it can’t be undone and having money in the pot reduces the interest charged.
As far as I can see the difference between my mortgage and yours is only the size of the minimum payment, by having an interest only mortgage I don’t have to make any capital payment each month. (Obviously by the end of the term, I have to repay the whole lot, so building up the savings pot is sensible.)

there is a big difference in that the overpayments reappear as an overdraft limit on another account so you still have access

I think Barclays may have regretted, they way they operated these mortgages(ex Woolwich)  as they have been trying to unwind these  reserve accounts for years by reducing unused limits and encouraging people to pay them off. 

68ComebackSpecial

getmore4less said:

68ComebackSpecial said:

silvercar said:

I won’t complain because I have a tracker interest only offset, tracking at base +0.5% for the life of the mortgage, but the savings are held in a separate pot. If you use that point to reduce your outstanding mortgage balance, you can’t get the money back. The upside is that the minimum monthly repayment is the interest on the difference between the mortgage balance and the savings pot.

Ours is a repayment offset tracker (base +0.85%) and any capital repayment, either via monthly repayments or lump sum additional ones, leads to an equal increase in the mortgage reserve account. So we could pay off a major lump sum now and then later draw the money back down and we could also choose to reduce the monthly payments to reflect the lower balance or maintain them to shorten the term. As it happens we paid off the majority of the mortgage after seven years but have left a balance of just over £1k, with a monthly payment of about £16, so that we can retain access to the sizeable reserve for the remainder of the term. My sister actually took out the same product six months after us and has a rate of base +0.35%.

That sounds like(or is) Barclays way of doing it

You convert the savings into an over draft limit  by overpaying the mortgage, you can cycle the money through the mortgage to get it near 100% as an overdraft and run it like a CAM mortgage,  great forthose that might need benefits at some point  no savings but access to the money.

silvercar said:

68ComebackSpecial said:

silvercar said:

I won’t complain because I have a tracker interest only offset, tracking at base +0.5% for the life of the mortgage, but the savings are held in a separate pot. If you use that point to reduce your outstanding mortgage balance, you can’t get the money back. The upside is that the minimum monthly repayment is the interest on the difference between the mortgage balance and the savings pot.

Ours is a repayment offset tracker (base +0.85%) and any capital repayment, either via monthly repayments or lump sum additional ones, leads to an equal increase in the mortgage reserve account. So we could pay off a major lump sum now and then later draw the money back down and we could also choose to reduce the monthly payments to reflect the lower balance or maintain them to shorten the term. As it happens we paid off the majority of the mortgage after seven years but have left a balance of just over £1k, with a monthly payment of about £16, so that we can retain access to the sizeable reserve for the remainder of the term. My sister actually took out the same product six months after us and has a rate of base +0.35%.

So mine is similar. If I keep money in the savings pot, it reduces the interest the minimum interest I have to pay each month. I can take back from the savings account any time I want. I also have the option to permanently reduce the mortgage by using that pot to reduce the mortgage. No point doing this at all, as once done it can’t be undone and having money in the pot reduces the interest charged.
As far as I can see the difference between my mortgage and yours is only the size of the minimum payment, by having an interest only mortgage I don’t have to make any capital payment each month. (Obviously by the end of the term, I have to repay the whole lot, so building up the savings pot is sensible.)

there is a big difference in that the overpayments reappear as an overdraft limit on another account so you still have access

I think Barclays may have regretted, they way they operated these mortgages(ex Woolwich)  as they have been trying to unwind these  reserve accounts for years by reducing unused limits and encouraging people to pay them off. 

Yes, it's a Woolwich/ Barclays product and yes, they have tried several times to get us to reduce the reserve limit (£250k), which we have always refused. We plan on having an extension built and may choose to utilise some of the reserve rather than using cash to pay for it.

getmore4less

68ComebackSpecial said:

getmore4less said:

68ComebackSpecial said:

silvercar said:

I won’t complain because I have a tracker interest only offset, tracking at base +0.5% for the life of the mortgage, but the savings are held in a separate pot. If you use that point to reduce your outstanding mortgage balance, you can’t get the money back. The upside is that the minimum monthly repayment is the interest on the difference between the mortgage balance and the savings pot.

Ours is a repayment offset tracker (base +0.85%) and any capital repayment, either via monthly repayments or lump sum additional ones, leads to an equal increase in the mortgage reserve account. So we could pay off a major lump sum now and then later draw the money back down and we could also choose to reduce the monthly payments to reflect the lower balance or maintain them to shorten the term. As it happens we paid off the majority of the mortgage after seven years but have left a balance of just over £1k, with a monthly payment of about £16, so that we can retain access to the sizeable reserve for the remainder of the term. My sister actually took out the same product six months after us and has a rate of base +0.35%.

That sounds like(or is) Barclays way of doing it

You convert the savings into an over draft limit  by overpaying the mortgage, you can cycle the money through the mortgage to get it near 100% as an overdraft and run it like a CAM mortgage,  great forthose that might need benefits at some point  no savings but access to the money.

silvercar said:

68ComebackSpecial said:

silvercar said:

I won’t complain because I have a tracker interest only offset, tracking at base +0.5% for the life of the mortgage, but the savings are held in a separate pot. If you use that point to reduce your outstanding mortgage balance, you can’t get the money back. The upside is that the minimum monthly repayment is the interest on the difference between the mortgage balance and the savings pot.

Ours is a repayment offset tracker (base +0.85%) and any capital repayment, either via monthly repayments or lump sum additional ones, leads to an equal increase in the mortgage reserve account. So we could pay off a major lump sum now and then later draw the money back down and we could also choose to reduce the monthly payments to reflect the lower balance or maintain them to shorten the term. As it happens we paid off the majority of the mortgage after seven years but have left a balance of just over £1k, with a monthly payment of about £16, so that we can retain access to the sizeable reserve for the remainder of the term. My sister actually took out the same product six months after us and has a rate of base +0.35%.

So mine is similar. If I keep money in the savings pot, it reduces the interest the minimum interest I have to pay each month. I can take back from the savings account any time I want. I also have the option to permanently reduce the mortgage by using that pot to reduce the mortgage. No point doing this at all, as once done it can’t be undone and having money in the pot reduces the interest charged.
As far as I can see the difference between my mortgage and yours is only the size of the minimum payment, by having an interest only mortgage I don’t have to make any capital payment each month. (Obviously by the end of the term, I have to repay the whole lot, so building up the savings pot is sensible.)

there is a big difference in that the overpayments reappear as an overdraft limit on another account so you still have access

I think Barclays may have regretted, they way they operated these mortgages(ex Woolwich)  as they have been trying to unwind these  reserve accounts for years by reducing unused limits and encouraging people to pay them off. 

Yes, it's a Woolwich/ Barclays product and yes, they have tried several times to get us to reduce the reserve limit (£250k), which we have always refused. We plan on having an extension built and may choose to utilise some of the reserve rather than using cash to pay for it.

I got in at base +0.95 and should have traded down as the rates as the dropped.

In  the end we never needed our reserve for the big spends and now we are end of mortgage life.
the stooze days really saved interest loading up the offset with free money.