Fully Offset Mortgage: Practicalities

dimbo61

We have also had an Offset mortgage with YBS and loved it.
Now with Barclays and again have an Offset mortgage.
We have a large savings pot offsetting the mortgage and pay very little interest each month.
If we need to dip into the Offset accounts to purchase Large items like a New car or New roof/kitchen we just take the money out and replace the savings ASAP.
You have to have discipline and be a saver and not a spender.

getmore4less

Tomatillo said:

Yes I appreciate that but we have very specific personal reasons for putting a high value on financial security over the next few years. We're happy with our current pension contributions (taking into account projected value against LTA etc) and don't want to lock this money up where we won't be able to reach it for 15 years right now. In any case we currently make use of a good chunk of our annual allowance so it would take us a while to get it into pensions even if we wanted to.

What I'm trying to decide is pay off mortgage vs offset and whether there's any reason not to do the latter. 

Thanks very much

Then It becomes a straight costing exercise, is the cost worth the flexibility, good chance it won't be the cheapest option but will give extra flexibility.

eg borrowing rates are around 1% for say a 5y  there are saving options that can match that on 1y terms and up to 2% on 5y
those that think rates are going up could cycle the cash through savings over the 5years and be better of than just offset.

Most of the best offset options have gone, they were lifetime trackers at base+ <1%  and there is the cost of moving lender if your current one does not have the option

Those great rates were set up and forget, now many are fixed terms so you still need to be on top of them.


Barclays is costly now, set up(£1749) and offset rates(2y tracker +1.45)) but does allow ISA to be offset to you can make use of that allowance if not getting used elsewhere.

YBS looks better with no product fee but higher rates if you ever use the money.