Offset mortgages

Glover1862

GreySpike said:

Hi 330d

I recently went through a very long conversation with Coventry BS to show them that their calculation for Offset Mortgages is incorrect. It overstates the benefit of the offset during the period when the amount in the offset meets or exceeds the mortgage i.e. at the end.

That may or may not make a big difference to you, but in my case it meant that although they 'advised' me to go for the offset in fact the standard fixed rate was cheaper over the lifetime of the mortgage.

Hope that helps and doesn't just add to your worry.

I’ve got a flexx for the term mortgage with CBS, in what way do you not get the offset benefit when the accounts are equal, you should be paying no interest at all. My aim is to get the mortgage and saving account to balance, particularly as they have increased rates when base rates moved up, admittedly not by the full amount but they never decreased when rates went down to 0.1%. My idea was to get the accounts level then whatever happened to IR it would make no difference, my understanding is that the interest rate should be zero for the remainder of the term, are you saying that’s not the case?

getmore4less

GreySpike said:

Hi 330d

I recently went through a very long conversation with Coventry BS to show them that their calculation for Offset Mortgages is incorrect. It overstates the benefit of the offset during the period when the amount in the offset meets or exceeds the mortgage i.e. at the end.

That may or may not make a big difference to you, but in my case it meant that although they 'advised' me to go for the offset in fact the standard fixed rate was cheaper over the lifetime of the mortgage.

Hope that helps and doesn't just add to your worry.

The worst offender for misleading calculations was the One Account.
It was very easy to input numbers that had is double count the mortgage payment

Once you took account of savings rate properly a lot of offsets never saved money.

The flexibility was the main benefit.

The reality is all you are doing with an offset is borrowing less.

When offset rate margins widened they became even less viable.

getmore4less

Some offsets used to pay the mortgage rate on excess savings but that got stopped.

There is no magic to offsets all you are doing is borrowing less with the convenience of being able to borrow more(uses savings)
Simple calc based on the difference in the 3 rates (regular,offset,savings) and the savings.

The increase in margin on offset rates makes it hard to save anything the key benefit is flexibility.