Offset Mortgage - Is It Worth It?

desisaver

Just wanted your opinions on the pros and cons of having a 100% offset mortgage e.g if you have a £250K mortgage you have £250K in savings against it.

Also wanted to know what would be the best way to start repaying the capital since no interest will be earned on the offset amount!

Thanks in advance

Gorgeous_George

pro
Savings available when required.
Deeds held in safe custody by lender

con
Interest may be levied/applied using different methods leaving a payment due.
Lender may close mortagge down (nothing in it for them).

GG

silvercar

pro

savings guaranteed to be effectively at mortgage interest rate net
Access to funds with no hassle or further credit checking

con

there is a query whether more than 35k (70k for joint holders) would be protected in the event of your lender collapsing. This depends on how your money is held but at the very best would result in your mortgage being paid off and so losing access to funds, at worst you lose the majority of your savings. Only a remote possibility I know.

desisaver

Thanks guys. Something to really thing about. Also if I have 100% of the mortgage in savings that how much will the intrest rate matter as I am not paying any?!?

silvercar

It should only matter if you want access to the savings, if you are confident that you will never need access it makes no difference.