offset mortgage, which is best offsetting or overpaying

mrsm

Mr_helpful wrote: »

You are probably a candidate for the one account mortgage.

I take it that's said with a huge dollop of sarcasm. FWIW we've had a flexible mortgage for 10 years and its worked very well for us. We have limited excess money but have still managed to pay off a big chunk, even tho we've since halved our income and taken payment holidays.
The FD account is right FOR US. We've fixed at what I feel is a good rate 5.15% for 10 years giving much needed security whilst our children are young and we're on a single income. We have 18 yrs left to run but the amount we've set our overpayments at (and we're comfortable paying) means we will finish when the fixed rate does, ie 8 years early.
I understand offest mortgages have a bad name, but mainly because the rates are high. We felt the rate with FD was low enough to be happy to fix for so long and if in times to come we kick our selves because the rates have dropped below it at least we'll be happy knowing we'll still save 8yrs interest

missymouse

If my husband and i combine our monthly salaries and have just one account if we take a first direct mortgage, will this pay off the mortgage quicker and can you keep a separate savings account so the money does not get so mixed up. Would it be better to keep our accounts as they are for marital relations. He may not like my e-bay spending habits.

We overpay on our NR already and it tells us we have xxx amount of money in the pot on the statement but we owe less

mrsm

missymouse wrote: »

If my husband and i combine our monthly salaries and have just one account if we take a first direct mortgage, will this pay off the mortgage quicker and can you keep a separate savings account so the money does not get so mixed up. Would it be better to keep our accounts as they are for marital relations. He may not like my e-bay spending habits.

We overpay on our NR already and it tells us we have xxx amount of money in the pot on the statement but we owe less

i think i answered on your other fd thread? twice the money will help clear quicker as more offset and you could link indviual accounts.
BUT FD are no longer offering to new customers, you need to already have a current account with them

mrsm

http://forums.moneysavingexpert.com/showthread.html?t=836517

missymouse

thanks for your help MRSM.

KiKi

Capricorn_One wrote: »

I may have this wrong but my understanding is that you pay interest on the un-offset amount but pay the same payment as you would every month. There's no interest added to the savings pot. It just sits there offsetting the total mortgage. So your monthly payment contains more capital than it would normally.

Apologies if that's what you're saying. It's getting near midnight.

Hi

You're right in as far as you *do* pay interest on the un-offset amount, and you *do* pay the same every month.

However, for the Abbey flexible mortgage you do get the interest that you don't pay on the offset amount credited to the savings pot. I have quite a bit offset against my mortgage, and every month, the Abbey credit my savings with a 5.75% of the savings amount (obviously that's a month's worth, not the full 5.75% which is over a year).

So my savings account is credited with £160 a month from the Abbey, which isn't taxed. At 5.75%, the equivalent interest rate I'd need in a regular savings account is about 9.56%, so I do put nearly all my savings there. I'd be crazy not to!

I accept that might not be the same with FD, but I did say I was talking about the Abbey mortgage!

KiKi

Capricorn_One

Mr_helpful wrote: »

You are probably a candidate for the one account mortgage.

Maybe but aren't there better deals than that. Like the principle, though.

missymouse

i spoke to a FD guy tonight about the mortgage so at least the ball is rolling. We can have separate accounts so i don't have to worry about my other half moaning about my spending habits. I think it will benefit us and at least some of the money which sits around in our current accounts will be offset against the mortgage. We don't have massive savings though.

The Abbey sounds good too.