Any lender allow overpayments/underpayments/refund of overpayments

IAMIAM

It seems like no lender does anymore more.

I would like a mortgage I can overpay, but if needs be draw that overpayment money back out if needs be, it seems I can only see Barclays allow underpayments and thats it?

Offset seem non existent or extortionate rates?! Scottish Widdows and First Direct no longer even do offset. Any advice on product lenders?

PropertyGuru_Wannabe

YBS has offset Mortgage 4.46% fixed until 30/11/2030 and £995 product fee.

amnblog

There are a handful (and just that) of Lenders on the market that let you overpay and underpay. They call it offsetting.

jifmoose

We're with Barclays and have some experience with this.

That's right, Barclays have a (slightly opaque) overpayment mechanism that allows relatively generous overpayments, which then go into a separate "overpayments balance". Mostly this shows as a reduction of the mortgage balance and reduces the interest payed: but it is indeed possible, on demand, to set up an underpayment which is funded from the overpayments balance. It's a simple online toggle and as long as there's enough in the overpayment balance I don't know of any restriction to how much you can underpay (we've never tried it, so I don't know if it's possible to underpay all the way to £0). The important thing: it's impossible to get money back out the "overpayment balance" account once it's been overpayed. So that's the critical difference from a true offset.

It also happens we attempted to product switch to an Offset mortgage with Barclays (in 2021, I think). This was shown just plainly available in the website interface for making the switch at the end of our fixed rate - after doing the maths it would have been very favourable to us, so we went ahead and clicked it. Normally that's it: everything just changes automatically. But this time, it started a chain of more and more complex interactions: talking to their internal advisors, and eventually escalating to getting solicitors (!) and surveyors (!!) involved. Bizarre, since it was the same property and nothing had changed.

We ended up giving up on the offset, complaining and actually getting a small amount of compensation for (rather a lot) of time wasted. It became clear that they really, really did not want people on the offset mortgage. Fine, but I wish they hadn't tempted us with it in the first place! We just got a standard fix (in about 5 minutes) after that.

jifmoose

As an afterthought: we did the product switch again with Barclays in May this year, and actually IIRC the Offset product did appear available in the list again! Not wanting weeks of hassle I didn't even think about selecting it though.