Offset mortgage with IF

totally_confused_3

Hi, I have posted on this thread and haven't gotten any responses and was wondering if someone could help me getting round what is happening as I can getting confused.

Thanks!!!

http://forums.moneysavingexpert.com/showthread.html?t=831349&highlight=intelligent+finance

luckyfool

totally_confused wrote: »

Hi, I have posted on this thread and haven't gotten any responses and was wondering if someone could help me getting round what is happening as I can getting confused.

Thanks!!!

http://forums.moneysavingexpert.com/showthread.html?t=831349&highlight=intelligent+finance

If you opt for any offset savings you have to go towards reducing the mortgage term, your monthly mortgage payment would remain the same. It just means your outstanding capital would reduce faster and depending on how much you have offset then your mortgage would be paid off faster and you would pay less in interest overall.

If you go for the other primary route, then your monthly mortgage payment is recalculated and reduced to reflect any offset savings you have. i.e. the mroe savings you have the lower the monthly mortgage payment you will have. However your mortgage will still get paid off over the original term and you will still pay a similar amount in interest (just less in monthly payments).

totally_confused_3

I think I get what you are saying. I guess why we are confused is because we intend to pay the same monthly payments even though our amount of savings will increase. So effectively, we are still reducing the outstanding capital right? I think by going for the "original route", your interest get recalculated and you pay less monthly interest. This is not what we want. So what route is this called for IF?

I think we didn't realise that there were different payment routes for IF as with FirstDirect, we could just keep the same monthly payments and payoff faster.