First Direct 2 year offset mortgages

Murtle

Hi

I hope someone can help, but I'm confused by the two options for 2 year offset mortgages offfered by First Direct, why does the one with the higher charges come out most favoured on mortgage searches (i.e. the top one below)??

I can't work out the difference, but am comparing the two year with the five year and don't understand this bit.....

2 year fixed rate offset Mortgage

4.75% for 2 years, reverting to our standard variable rate for the remaining term, currently 6.25%.
The overall cost for comparison is 6.3% APR.
(offset Mortgage arrangement fee £999 / fixed offset Mortgage booking fee of £499, maximum loan size £300,000)
2 year fixed rate offset Mortgage

5.25% for 2 years, reverting to our standard variable rate for the remaining term, currently 6.25%.
The overall cost for comparison is 6.2% APR.
(no arrangement fee / fixed offset Mortgage booking fee of £99)

Sorry if it's been asked before, I have trawled and trawled!

Thank you

red_flump

Because the searches are not taking into account the whole cost, for me with a £56K mortgage the charges would totally wipe out the savings in interest. Try the calculation with a £300K mortgage and see what happens.

red

Murtle

Thank you red flump that makes perfect sense then!!!

sg1982

I am also considering a 2yr fixed offset @ 5.25%. fees seem to be only 2 x £99 and a get out fee of £150 when you leave first direct- seems good to me

my details are as follows:
my 4.49% fixed rate mortgage with halifax is coming to an end at the end of march 08- this will revert to 7.25%.

i have £70 k remaining, have about £20k available in savings and plan to pay off completely in 2-3 years (would be 2 but also have a wedding to pay for).

so i have the following questions:
- have i missed something (fees?) about this FD mortgage or is it an excellent product? i cant seem to see any competitive products from other lenders?!?

- i understand it is going to take around 8 weeks to get this FD product sorted- any tips for the next 2 months with my current lender? (i plan to pay the 20k off with the halifax to reduce the term- if this does not cost me)

-is there a better product out there for me considering my circumstances?

- is there a similar product that is quicker to set up?

- is the offsetting the same as paying off capital in repayment year terms?

i am new to the forum and any help would be appreciated.

if you need any more details to help me more then just ask

thanks in advance

sg1982

I am also considering a 2yr fixed offset @ 5.25%. fees seem to be only 2 x £99 and a get out fee of £150 when you leave first direct- seems good to me

my details are as follows:
my 4.49% fixed rate mortgage with halifax is coming to an end at the end of march 08- this will revert to 7.25%.

i have £70 k remaining, have about £20k available in savings and plan to pay off completely in 2-3 years (would be 2 but also have a wedding to pay for).

so i have the following questions:
- have i missed something (fees?) about this FD mortgage or is it an excellent product? i cant seem to see any competitive products from other lenders?!?

- i understand it is going to take around 8 weeks to get this FD product sorted- any tips for the next 2 months with my current lender? (i plan to pay the 20k off with the halifax to reduce the term- if this does not cost me)

-is there a better product out there for me considering my circumstances?

- is there a similar product that is quicker to set up?

- is the offsetting the same as paying off capital in repayment year terms?

i am new to the forum and any help would be appreciated.

if you need any more details to help me more then just ask

thanks in advance

mysterybadger

I've just made this choice and it's a tricky one--the mortgage market has become a "confusopoly" in which it's hard to compare products directly.

Basically the difference between the two products is 1/2 a per cent discount on your payments for two years versus £1400 extra on the loan for ever. The way I approached it was to use this handy calculator
(http://www.yourmortgage.co.uk/showPage.html?page=your_mortgage_java_calculator)

to see if the monthly saving (in my case about £45) would be enough to pay off the £1400 in two years. It wouldn't--I think you'd have to borrow at least £275k to make it worthwhile. If the discount was for three years it would have made sense

For my money there isn't a better deal around at the moment than this 5.25% rate. The entry fees are low, and the ability to offset means that if cheaper money turns up in the interim you can take advantage of it. It's actually an interest-only loan, so you can do what you like when it comes to repayments