Offset Mortgage advice

aliasojo

I'm not asking for a definitive answer, more a list of suggested possibles.

Very small mortgage outstanding on existing property. We want to remortgage to raise funds to finish house renovation and to have capital to use as a start in a new place if we decide to emigrate.

We figured an offset mortgage would be beneficial as the excess cash that was waiting in case we emigrate could be left in an account to offset the interest in the meantime.

Our intention, if we go, is to rent this place out......we already have a tenent lined up should we go down this route. Rent would more than cover mortgage payments, so excess paid in every month could lie in account, again for offsetting purposes.

Although we have had an offset personal loan before, which we have hardly paid any interest on at all, thanks to stoozing, we have never been down the offset mortgage route.

Would our intention to rent out our house eventually affect an offset mortgage? Is there any pitfalls we should be aware of?

Any recommendations for where to look for a good offset mortgage?

Thanks in advance.

aliasojo

This board is usually full of opinionated people (meant in the best possible way, of course ).......where are you all???

Joe_Bloggs

@Aliasojo
You have no numbers in your post. Good luck with your future plans.
J_B. (Where are you thinking of emigrating to ?)

aliasojo

Ah, is that why I didn't get replies? Thanks Joe.

My query was really just a request for general advice, rather than specific which is why I didn't bother listing figures.

My main concern was to find out if there was anything we should be aware of when applying to remortgage, given that we intend to rent out later on. I don't even know if you can get an offset mortgage if the intention is to rent out at some point.

I also wondered if people could perhaps suggest good offset mortgage providers in general so we could have a look. We're only looking to borrow around 50 or 60K, and probably 30K of that at least would be sat in an account until we went.

It's Canada we're thinking of btw. Please no jokes about snow.....it's worrying me enough already!

GRMat158

Can only speak from my own experience - but Intelligent Finance's offset product is fine for me. Allows for multiple 'buckets' all of which can be offset.

MarkyMarkD

You don't want to offset lots of spare money against the mortgage, if you are letting the property.

The interest on the mortgage would be offsettable for tax against the rental income in any case. Offsetting just reduces the tax relief.

Most (or at least many) lenders wouldn't let you let, on a permanent basis, on a residential mortgage. So you would be wasting money by getting an offset in the first place, just so you could offset once you emigrated.

Let me suggest you do the following instead.

Take a FLEXIBLE mortgage (NOT an offset) which allows limitless under and over payments and draw downs.

Borrow as much as you will ever want (if you have the income to support it and the property is worth enough).

Repay everything except what you really need IMMEDIATELY after completion.

Pay interest on only the amount you actually need.

When you emigrate, draw down the remainder and then get permission from the lender to let, or remortgage to a BTL mortgage if required.

You will pay a far cheaper interest rate on the flexible mortgage than a specific offset one.

Many standard mortgage products are in fact flexible - but you want to look for one which allows LIMITLESS overpayments as well as LIMITLESS drawdowns - some just allow overpayments, which wouldn't serve your purposes well.

Scott

Offset isn't really that great an arrangement for small mortgages, either, as Mark explained above there are much more suitable options.

To be honest, finding a Current Account mortgage rather than an Offset might suit your needs much more closely.