Offset - Best Management, help needed! 27 February 2008 at 9:16PM in Mortgage-free wannabe 7 replies 914 views

kernowmaid_2

Can someone please point us in the right direction, this is our current situation and we are not sure what to do - basically to be mortgage free asap. We do not want to lose our savings by paying off a lump sum.

First Direct - Offset Mortgage
Interest Rate - 5.99% fixed for 2 years (1 yr 9 months remaining)
Term - 25 years
Mortgage - GBP 108,500
Savings linked to offset - GBP 56,000
Current monthly repayments - GBP 750

Maximum monthly repayments (Possible) GBP 1,000

Can you please keep it simple as some of the financial jargon confuses us!

Thank you

george_jetson

Do you have a fd current account? If so you should link that to your mortgage account as well - then as soon as your salary is paid into your account it starts reducing the amount of interest you pay.

If all your accounts are linked to your mortgage, the question of 'overpayments' becomes academic as your money is reducing the value of your mortgage whatever account they're in.

Capricorn_One

george_jetson wrote: »

Do you have a fd current account? If so you should link that to your mortgage account as well - then as soon as your salary is paid into your account it starts reducing the amount of interest you pay.

If all your accounts are linked to your mortgage, the question of 'overpayments' becomes academic as your money is reducing the value of your mortgage whatever account they're in.

Surely, having the money in the a/cs offset is not making overpayments irrelevant as the offset amount is merely reducing the amount of interest but not the capital itself.
Sorry if I misunderstood, though.

kernowmaid_2

Thanks for replying.

Our accounts are linked to FD offset mortgage.

Would you recomend stoozing to help pay off our mortgage?

Alternatively, do you think a cash transfer from a credit card company would be any good? Say trying to get 46K and then put the money into a high savings interest account, ie A & L 12 % - we don't pay tax at the higher rate.

Can anyone work out how long it would take to pay off our mortgage if we don't do anything - keep the same amount of savings and continue to pay GBP 750 off per month.

Like any idea's to help pay off the mortgage asap.

Thank you

phizzimum

kernowmaid wrote: »

.

Can anyone work out how long it would take to pay off our mortgage if we don't do anything - keep the same amount of savings and continue to pay GBP 750 off per month.

your outstanding mortgage is £52 500 (your capital sum minus your offset savings), so you can use an online mortgage calculator to work out how long it will take to pay that back. There are links to lots of different calculators in a sticky at the top of the page.

are you tied into your mortgage when the fixed rate period ends? if so do you know what your new rate of interest will be?

kernowmaid_2

We are are tied to the fixed rate period, after it finishes it reverts to Bank of England base rate plus ¼% (going from memory).

Do you think we should put our overpayments into a high savings account (ie 12% A & L) and earn interest that way or keep knocking the money off the mortgage?

dimbo61

hi why dont you do all three
1 pay into the 12% a&l saving account ( how much are you allowed to save each month/year ? )
2 overpay on the mortgage ie £750 monthly payment now max £1000 !!
3 save into your offset account as much as you can over next 21 months.
Dont forget ISA,s lloydstsb paying 6.5% fixed for a year on £9000+
all will help reduce your mortgage and become MF asap GOOD LUCK

george_jetson

Capricorn_One wrote: »

Surely, having the money in the a/cs offset is not making overpayments irrelevant as the offset amount is merely reducing the amount of interest but not the capital itself.
Sorry if I misunderstood, though.

All I meant was that if your current and savings accounts are linked to your offset mortgage, it doesn't really matter which 'pot' you stick your money in; the effect is the same - the amount you owe and interest you pay go down.