Offset mortgage advice - Chat Forum

Re: Offset mortgage advice

singletrackmind — Wed, 14 Sep 2011 19:57:33 +0000

I had a One Account . I paid off my mtg in 6 years , as I inherited some lump sums.
Each month they take out the interest only . Look at it as a very large overdraft agreement . One Account is designed to work for you if you spend less than you earn most months .
If you have no will power , or a 'see , must have' mentality then this is not the product for you.
The repayments are what you dont spend each month , so it might be £10 or £500 . all depends on your outgoings .
The One Account website is very good and has a savings calculater on it .
If ,in a month you have to buy car tax , a new washing machine , some wheels and go on holiday no problemo . As long as you have been overpaying you can aceess the overpaments up to your 'overdraft facility'
I would have another one ( well ..still got it with a cash fund accruing ) for next mtg .

Re: Offset mortgage advice

bellerophon — Wed, 14 Sep 2011 19:56:29 +0000

Same as Richmtb here, known as the oneaccount everything goes in and does take get some getting used to. We get a rate of 3.65%, the rate depends on ltv. Their calculator can show what savings you can make, which can be achieved just by having your salary going into it as interest is worked out on daily basis, but obviously the more you leave in the better the savings.

Servo, makes a good point; on 'savings' we're effectively getting a 3.65% interest rate, last time I looked to get rates like that needed lots of cash and few withdrawals a year.

Re: Offset mortgage advice

ebygomm — Wed, 14 Sep 2011 19:45:38 +0000

I think offsets look good, especially if you live your life on credit cards and then pay them off in full. If they're still about when we're in a position to remortgage and we have enough equity I'd seriously look at one. Mind you, if we had enough equity for an offset mortgage we'd likely be able to access must better interest rates on fixed products too.

Re: Offset mortgage advice

GJP — Wed, 14 Sep 2011 19:37:49 +0000

I was under the impression that many lenders allow you to overpay to create an overpayment reserve. This has some restrictions mine is no more than £500 per month, but in reality I can easily live with that.

Mine is with Nationwide, competitive interest rate, not the best, but cheaper than paying a premium for a specific offset. The other drawback is I can't just draw my overpayment out with a bank card or whatever method and it is a bit of hassle.

But if you are starting from zero savings it may be worth looking at such deals

Re: Offset mortgage advice

servo — Wed, 14 Sep 2011 14:36:19 +0000

The big advantage for me is that your savings are tax free. If I put 10K into my offset mortgage I get interest at the mortgage rate and pay no tax at all. I have instant access as well.

Re: Offset mortgage advice

djglover — Wed, 14 Sep 2011 14:11:56 +0000

Sue, with first direct, its your responsibility to make the capital repayment if you want to. I just do it in a flexible way rather than a set amount each month. There is nothing to stop you paying it though!

Re: Offset mortgage advice

mastiles_fanylion — Wed, 14 Sep 2011 14:08:21 +0000

Fanylion, how much do you think you save each month doing this?

I've had an offset for 6months but not really using it to its full potential.

And which credit card is best for it or ant other tips to get the most out of it.
To be honest I don't know how much we save as the amount I take back out each month varies wildly from one month to the next - we use it as a savings account too (so sometimes large sums come out for holidays etc).

We only got it originally as I wanted a mortgage that was flexible enough to overpay large sums without penalty should I ever have a windfall (as I have my own business I still dream this might happen one day....) and the rates were (at the time) favourable to other standard rates. I do wish I had used it to its fuller potential from the off though as I am sure we could have chipped away much more at the capital *but* it *is* going down and the letters I get keep saying things like 'keep on at this rate and you will pay it off 5 years early' and things like that. As time has gone on I have become more obsessed with paying it off quickly and have started to use it more aggressively (we DID have separate savings accounts which I now see would have been more effectively used in the offset mortgage account).

We have a Capital One CC (no fees, 1% cashback - but it was 3% for the first three months).

Re: Offset mortgage advice

lodious — Wed, 14 Sep 2011 13:42:15 +0000

We had one with IF, absolutely the best thing we ever did. Very simple to understand, setup and administer. The only 'problem' is that you never feel like you have much spare cash, as it gets passed over to the mortgage. No mortgage anymore....that feels great :-)

Re: Offset mortgage advice

Doh1Nut — Wed, 14 Sep 2011 12:52:17 +0000

The big drawback is the interest rate - it will be less favourable on an offset account.
The only way I could get my head round it was to get a spreadsheet of all the set-up fees and interest rates and offset amounts.

It is then possible to find out what the crossover value is
eg on 100k at 3.5% standard mortgauge = 3.5k repayments in a year
100k at 4% offset (with zero offset) = 4k repayments in a year
87.k at 4% offset (with 12.5k offset) = 3.5k repayments in a year

so until you have 12.5k savings you will loose out.
but the flexability of a rainy day fund has a value
etc. etc.

Re: Offset mortgage advice

Ro5ey — Wed, 14 Sep 2011 12:51:10 +0000

"We have it and it is very useful - I overpay every month, buy things on a cashback credit card then withdraw the overpayment (well, the plan is to only need to withdraw *some* of the overpayment but that doesn't always work) to pay off the credit card in full. That way I get to borrow money for free (with cashback) and my own money is chipping away a little at the capital owed."

Fanylion, how much do you think you save each month doing this?

I've had an offset for 6months but not really using it to its full potential.

And which credit card is best for it or ant other tips to get the most out of it.

Cheers Andy