Mortgage: How much to borrow - calc on perm or contract rates

[kaiser78]

Barclays/Woolwich asked for a projection of my next year earnings from my accountant when I was applying for my offset, that's all.

But then I was going to be offsetting what I was borrowing and so probably seen as a safe bet.

[kaiser78]

Barclays/Woolwich asked for a projection of my next year earnings from my accountant when I was applying for my offset, that's all.

But then I was going to be offsetting what I was borrowing and so probably seen as a save bet.

This has spawned another question in my mind - given that I am fully offset, ie savings = mortgage owed, I am still paying a lump sum off the mortagage each month.

My IFA says that in effect I do not have a mortgage and so don't really need to pay off this lump sum. I don't really see this as I stil owe £xk on the property and the more I pay off the quicker the mortgage gets cleared - can anyone help with my IFA's logic ?

[Scrag Meister]

They turned me down because I did not earn enough money, they would only lend on the basic wage not the dividend payment, they had full accounts details i wanted 70 grand for a property valued at 200 so we had more than 50% equity.

Just goes to show that some lenders really have no idea about how our business works.

[Support Monkey]

This has spawned another question in my mind - given that I am fully offset, ie savings = mortgage owed, I am still paying a lump sum off the mortagage each month.

My IFA says that in effect I do not have a mortgage and so don't really need to pay off this lump sum. I don't really see this as I stil owe £xk on the property and the more I pay off the quicker the mortgage gets cleared - can anyone help with my IFA's logic ?

If your mortgage is 50k and you have 50k in savings in your offset account in theory you don't have a morgage, if you then spend 10k and have 40k in your offset accounts you will only owe 10K on your mortgage or is that to simplistic, I am with you i would be paying the lump sum

[northernladuk]

Just goes to show that some lenders really have no idea about how our business works.

I would hazard a guess that they do know how small business work and won't touch it due to their climate of risk aversion. People are more likely to have or let their business go under and quit than give up their permie day jobs I guess.

[Spacecadet]

This has spawned another question in my mind - given that I am fully offset, ie savings = mortgage owed, I am still paying a lump sum off the mortagage each month.

My IFA says that in effect I do not have a mortgage and so don't really need to pay off this lump sum. I don't really see this as I stil owe £xk on the property and the more I pay off the quicker the mortgage gets cleared - can anyone help with my IFA's logic ?

The advantage in keeping the money in savings instead of paying off the mortgage is that should you need it (due to extended bench time) the money is there for the taking. At the same time you're not paying interest on the mortgage.

What you do depends on what you want: cash security or the mortgage cleared.