Barclays Mortgage and Offset facility

shiraz99

I've got a Barclays interest only mortgage, originally a Woolwich mortgage, and it had/has an offset facility which I've not up until now made use off. I have some spare funds so was thinking of transferring them over to the mortgage current account but I didn't see any change in the mortgage term or monthly payment. The only thing changed was an increase in the Reserve amount available to me.

How does the Barclays offset mortgage work and how can I ensure that the account is set up correctly to take advantage of it?

Brie

I believe the monthly payments would not change but the amount of interest you would be charged would be less due to having the "savings" offset against the mortgage principle.  

I have a VirginOne account via RBS.  Effectively it's a current account with a massive overdraft which is our mortgage.  So the in some ways similar to your offset with Barclays/Woolwich.  The more money that goes into my V1 account the less the overdraft/mortgage amount is and therefore the less interest is charged each month.  I can on the other hand spend all the way up to the full "overdraft" amount if I like but would be charged more interest as a result.  The difference between your set up and mine is that mine is just the one account while yours is two.

shiraz99

Brie said:

I believe the monthly payments would not change but the amount of interest you would be charged would be less due to having the "savings" offset against the mortgage principle.  

I have a VirginOne account via RBS.  Effectively it's a current account with a massive overdraft which is our mortgage.  So the in some ways similar to your offset with Barclays/Woolwich.  The more money that goes into my V1 account the less the overdraft/mortgage amount is and therefore the less interest is charged each month.  I can on the other hand spend all the way up to the full "overdraft" amount if I like but would be charged more interest as a result.  The difference between your set up and mine is that mine is just the one account while yours is two.

That's what I thought would happen but I didn't see a change to the monthly payment, although it was only a small amount I transferred onto the account initially, eg, £1K.

dimbo61

If you owe £5,000 then £1,000 is a large amount but if you owe £200,000 then £1,000 will only make a slight difference to the Offset effect and may take a month or two to kick in. 
Have you got a plan to repay the mortgage ?
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