Offset mortgages

Flugelhorn

housebuyer143 said:

jen_fpb said:

Would people's answers be different if the savings amount was higher?

If you were offsetting 100% then I would actually probably go for offset because the higher rate than standard makes no difference to you. 
When I get to 100% I'll jump on the offset bandwagon tbh. 

So much depends on a lot of things such as tax status etc. A 40% tax payer is going to favour an offset just because of the tax savings.

Do you think you will be able to offset 100% relatively quickly into the mortgage?

I agree - I was 100% offset for a few years, savings rates were pathetic and I was paying 40% tax. Effectively meant that all mortgage payments were paying off the principal

dimbo61

I am a huge fan of offset mortgages.
Barclays allow you  to offset ISA,s 
YBS have Fee free deals and friends and family scheme.
Any Interest more than £1,000/£500 now means paying Tax on the Interest earned !
If your a higher or lower rate tax payer ?
Have £40,000 in savings to access when needed is always a good idea.
You might pay 6% Interest in the current market but rates are high for normal mortgages as well.
You would be paying Interest on £30,000

silvercar

IAMIAM said:

Why has first direct stopped them?

FD had a current account mortgage rather than a true offset. You maintained a negative balance on your current account that was your mortgage balance combined into your current account, so effectively it was a low rate secured overdraft.

jen_fpb

dimbo61 said:

I am a huge fan of offset mortgages.
Barclays allow you  to offset ISA,s 
YBS have Fee free deals and friends and family scheme.
Any Interest more than £1,000/£500 now means paying Tax on the Interest earned !
If your a higher or lower rate tax payer ?
Have £40,000 in savings to access when needed is always a good idea.
You might pay 6% Interest in the current market but rates are high for normal mortgages as well.
You would be paying Interest on £30,000

Oooh the ISA thing is interesting!

vacheron

jen_fpb said:

dimbo61 said:

I am a huge fan of offset mortgages.
Barclays allow you  to offset ISA,s 
YBS have Fee free deals and friends and family scheme.
Any Interest more than £1,000/£500 now means paying Tax on the Interest earned !
If your a higher or lower rate tax payer ?
Have £40,000 in savings to access when needed is always a good idea.
You might pay 6% Interest in the current market but rates are high for normal mortgages as well.
You would be paying Interest on £30,000

Oooh the ISA thing is interesting!

It is, and it is one of the main reasons I chose the Barclays Offset back in 2010.

Back then the annual cash ISA limit was only £3,600 per year, so having a cash ISA in your offset allowed you to continue to transfer the £3,600 allowance each year from your savings account to your ISA account inside the offset arrangement.

The effect on the offset was nothing, but once the Mortgage was paid off (or fully offset), you could transfer the ISA wrapped savings out first and resume earning tax free interest on them.

Now the limit is £40k p.a. for a couple, you can now re-deposit in a couple of years what it would have taken decades to accumulate 12 years ago, so this is not quite as big a benefit, but still useful nonetheless.

jen_fpb

@vacheron Barclays only doing offset variable and not fixed (we are looking at fixed)

housebuyer143

jen_fpb said:

@vacheron Barclays only doing offset variable and not fixed (we are looking at fixed)

Yorkshire building society do fixed. In terms of good rates it was Barclays for variable or ybs fixed. Ybs is direct only so your broker won't find them. Look on their website if you are interested.

silvercar

Useful calculator here: https://www.moneysavingexpert.com/mortgages/offset-mortgage-calculator/

jen_fpb

Thanks all.

Using London and Country so let's see what they advise...