Offset Mortgage opinions...

sunfish2

Hi,

I've got a mortgage of £27000 and want to change to an offset. I've found one with the Coventry Building society, interest rate fixed for 5 years at 6.39%.Does this sound like a good deal?

I've got isa's of £18,000 plus £5000 that can go in the pot for now.

Does this sound like a good idea or should I pay off a large chunk of the mortgage with my savings? I won't be able to save any more now.

When I saw that I would be paying them back £53,000 it got me thinking...

The term is 23 years. Is it correct that I will have paid it off in 12 years? The monthly payments are £186, same ish as a repayment mortgage, so that must be the benefit of them having my savings, am I correct?

Opinions welcomed please, its baffling me,

Sunfish2.

sarkin

I would get a lower rate and make over payment, also change the term of the mortgage and you will pay les interest.

dimbo61

hi sunfish2
you could cash in most of your ISA,s ( keep £1,000) add your £5k savings
borrow £5,000 over 3 years at 6.9% = £ 153.68 a month paying back £5532.48
Then pay off your mortgage and clear you loan over three years
No remortgage fees and only £532.48 interest !
also little in the way of savings but you can always build them back up.
Fancy being mortgage free !

sunfish2

Hi,

Yes good advice, its tempting, obviously it would be great to be mortgage free. Don't want to be totally without a nest egg though.

This deal with the Coventry is fee free completely. Does anyone know if this is a good interest rate?

also, am I right about shaving off 12 years off the term?

Thanks in advance,

Sunfish2.

MarkyMarkD

Honestly, sunfish, it's pointless to move your mortgage somewhere (incurring fees etc.) when you can simply pay it off.

Even if the Coventry deal is fee free, presumably there are fees to redeem your existing mortgage.

You don't even need to do the personal loan thing that dimbo suggests - just pay off all except the last bit and leave that with your present lender. It's not really worth moving the £5k IMHO as you aren't going to reduce the rate much from where you are now.

sunfish2

Hi,

Thanks for your advice..been giving it a lot of thought. I am with northern rock at the moment and the rate is 7.59%.

It seems to me that if I pay my mortgage off with my savings I wont have any savings left, but thats the same as an offset anyway, as I'll have to leave them intact with the coventry to benefit from the whole point of an offset mortgage.

I can't really see any catch, just trying to talk myself into parting with my hard earned savings!

Any other views appreciated.

Thanks everyone who has replied, great board.

Sunfish2.

dimbo61

hi sunfish2
your hard earned savings are earning you 6.5% if you have got them
in the best paying account, and thats this year !
you are paying 7.59% to NR on your mortgage interest and northern rock
want there money back ASAP to repay the government hence the poor
SVR you are on.
So either take out a small loan and pay off the mortgage,
or do as markymarkd recomends and pay off the most of your mortgage
and overpay to clear the rest as quickly as you can.
clearing your mortgage in 2/3 years gives you 20 years + to build up
your savings again ! GOOD LUCK

Capricorn_One

sunfish2 wrote: »

Hi,

I've got a mortgage of £27000 and want to change to an offset. I've found one with the Coventry Building society, interest rate fixed for 5 years at 6.39%.Does this sound like a good deal?

I've got isa's of £18,000 plus £5000 that can go in the pot for now.

Does this sound like a good idea or should I pay off a large chunk of the mortgage with my savings? I won't be able to save any more now.

When I saw that I would be paying them back £53,000 it got me thinking...

The term is 23 years. Is it correct that I will have paid it off in 12 years? The monthly payments are £186, same ish as a repayment mortgage, so that must be the benefit of them having my savings, am I correct?

Opinions welcomed please, its baffling me,

Sunfish2.

I wouldn't cash in the ISAs. I think they're a long term nest egg.
Why not remortgage with Barclays/Woolwich? You can offset the ISAs on their tracker offset rate. Make overpayments and the mortgage will soon be gone as most of what you're paying will be capital.

Check the Egg calculator for inspiration:

http://new.egg.com/visitor/0,2388,3_54988--View_1028,00.html

If anyone's got a better idea I'd be interested in hearing it (seriously!).

dimbo61

sunfish2 only has a £27,000 mortgage and he would have to pay £595 application fee, survey fee/ valuation fee, legal costs and costs to redeem
mortgage with northern rock.
the tracker rate is 5.99% at the moment !
Its simply not worth moving to another lender when he have so much in
savings and could either stay with NR and pay off most of the mortgage
now or borrow £5k at £153 a month over 3 years and own his home next
weeek. He can save the £33 a month less he would be paying out into ISA,s
and build up his savings without a mortgage to worry about.

Capricorn_One

dimbo61 wrote: »

sunfish2 only has a £27,000 mortgage and he would have to pay £595 application fee, survey fee/ valuation fee, legal costs and costs to redeem
mortgage with northern rock.
the tracker rate is 5.99% at the moment !
Its simply not worth moving to another lender when he have so much in
savings and could either stay with NR and pay off most of the mortgage
now or borrow £5k at £153 a month over 3 years and own his home next
weeek. He can save the £33 a month less he would be paying out into ISA,s
and build up his savings without a mortgage to worry about.

You could well be right but he did say he wouldn't be able to save any more now.
If he cashed in his ISAs he'd lose the compounded tax free interest he's accumulated over the last few years. If he remortgaged with Barclays (fee is £595) at 5.74% and offset all his savings, he'd have a virtually interest free mortgage and still have full access to his savings.

I know what you mean about paying off the mortgage, though. I'd be tempted to do the same but this way he has the best of both worlds.

That's what I'd do. Maybe I'm wrong.