Offset Mortgages and Northern Rock

DorridgeDad

I recently remortgaged and went for an offset as I currently have signiifcant savings (not sure it will last, so wanted the flexibility of the offset). I created a spreadsheet of the costs over a 5 year period, comparing all offset providers and my flexible mortgage with Nationwide. First point is that there is a big variation in rates, OneAccount was 0.75% higher than Northern Rock for example. So make sure you shop around. Some charge upfront fees, others do not, hence the need to look at the cost over 5 years. On my estimated level of savings, the cost over 5 years was £10,000 less than staying where I was. I went with Northern Rock because they offered the lowest cost over 5 years due to the best rate and provided a savings and a current account linked to the mortage, some suppliers only provide a linked savings account. NR charged big set-up costs, but this is largely covered by a loyalty loan which you only pay back if you leave within 3 years.

Words of warning - Northern Rock do not tell you that you can only make 6 withdrawals a year from your savings account. Given that both current or savings account balances are offset, I am not sure of the need for a separate savings account. The current account has no internet access and there is no telephone banking, just a cheque book and branches! I did not know that there were still banks that were so backward. NR seem very disorganised with no co-ordination between mortgage and savings departments. They do offer a direct debit transfer service, but you have to ask for it. Certainly setting up the whole arrangement has been hard work, but I hope that now it is in place, I will see the financial benefits!