Offset mortgage quedtion

Hi all, 
I haven't used this site much recently but have read lots in the past and found it very helpful so hoping I may find some helpful advice.

I am due to remortgage in the next few months. I will be meeting my mortgage advisor in a couple of weeks to look at options too but I like to go in prepared.

I'm 47 divorced, 2 teenage kids, eldest due to start uni next year. I work in the NHS and earn just over £50k, this isn't likely to change any time soon.
My home is worth approx £350k and my mortgage is approx £70k with (i think) 8 or 10years left.
I've been on a fixed rate for past 5 years at 2%. Obviously I'm expecting a bit of a jump which will be a shock after having a very low rate for the past 13 years since I took the mortgage on after my divorce.

I have overpaid my mortgage in the past rather than put into savings however I have about 8k in an isa (at 5%). I also owe 3k on a credit card- interest free currently. 

I want to release some equity when I remortgage and take it up to £90k. This is so I can help my son when he goes to Uni, I also have quite alot of repairs/ decorating that needs to be done on my house.

I was wondering if an offset mortgage may be a good idea, the additional borrowing could stay in the savings account until I am ready to use it. 
I'm happy to extend the term of my mortgage as while I would ideally like to start overpaying again in the next few years I'm not in a position to at the moment. I have decent pensions (work and private) which will pay a lump sum enough to cover any shortfall in 20 years when I retire (although I don't think I'll make it that long lol!) 

Or would I be better to take another fixed/variable rate (depending on deals available) and putting additional borrowing into savings account until I'm ready to use it? 

Comments

  • That was longer than I thought!! 
    TL:DR

    Want to increase borrowing on mortgage. Would an offset be a good idea or put additional borrowing into savings account until I need to use it? 
  • No, I personally don't think it will be worth it. You don't really have enough savings to justify it in my opinion. Offset lenders are limited and they come with a higher rate and a higher product fee, potentially wiping out any benefit for you. 

    You really have the choice of YBS for fixed and Barclays for a tracker, so take a look. 

    In your case I would just take the lowest rate I could get and then put the money into a high interest savings account. You are likely to get similar on the money in savings or better just in a savings account.

    That's just my opinion but I don't think offset really works anymore unless you can offset the entire balance.
  • amnblog
    amnblog Posts: 12,389
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    Offset could we be a suitable product for you to use. It could be a good way to ensure the cashflow you need whilst your children are studying.

    Money in a savings account you pay tax on the interest.
    Money in an offset account you make savings against your interest without tax implications.

    Speak to your Broker.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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