Scottish Widows Offset Mortgage

[rowlando]

My current mortgage will soon be switching to the standard variable rate so I'm starting to look at remortgaging, particularly offset mortgages. I like the look of Scottish Widows, especially because they look contractor-friendly:

Adviser confirmation | Scottish Widows Extranet

Does anyone have experience with Scottish Widows and recommend them?

[Olly]

My current mortgage will soon be switching to the standard variable rate so I'm starting to look at remortgaging, particularly offset mortgages. I like the look of Scottish Widows, especially because they look contractor-friendly:

Adviser confirmation | Scottish Widows Extranet

Does anyone have experience with Scottish Widows and recommend them?

Aren't first direct offering a better rate? Contractor "friendly" too, just need to give them 3 years of accounts

[rowlando]

I bank with First Direct and when I phoned them up about switching my mortgage to them they would only count my salary, not dividends, as valid income. Seemed a bit silly to me. Maybe it was the particular person I was speaking to.

Have you or anyone else had success with First Direct recently?

[northernladuk]

Aren't first direct offering a better rate? Contractor "friendly" too, just need to give them 3 years of accounts

This... I have had 2 mortgage offers and got on to my partners joint mortgage in the past 4 years and have an agreement in principle waiting as we speak and being a contractor hasn't been a problem for any, even when I didn't have 2 years certified accounts (all mine were 2 years not 3 interestingly). All they said is take one year and use permie before that.

The only thing I can think that you mean when you say 'contractor friendly' is one that will take your day rate rather than your actual income which can be considerably different if you have been capping your income to the £40k mark

[northernladuk]

I bank with First Direct and when I phoned them up about switching my mortgage to them they would only count my salary, not dividends, as valid income. Seemed a bit silly to me. Maybe it was the particular person I was speaking to.

Have you or anyone else had success with First Direct recently?

What a carry on! Sounds more like person on the phone problem rather than with the company. Dividends is a recgonised income so no way they should exclude it, even if they have a super tight focus on their market and who they will lend to.

[rowlando]

I've just taken a look at First Direct offset mortgages and they're offering the same rates, but FD charge £500 less for the arrangement fee (the better FD rates have a hefty £1999 arrangement fee). The other thing that puts me off First Direct mortgages are that they're interest-only mortgages unless someone can explain to me the advantages vs repayment.

I want to borrow £100K on £170K property value, which is 60% LTV.

Scottish Widows Offset
2 year variable rate, currently 3.09%, £999 arrangement fee - repayment mortgage.

First Direct Offset
2 year tracker, currently 3.09%, £499 arrangement fee - interest only mortgage.

[northernladuk]

I've just taken a look at First Direct offset mortgages and they're offering the same rates, but FD charge £500 less for the arrangement fee (the better FD rates have a hefty £1999 arrangement fee). The other thing that puts me off First Direct mortgages are that they're interest-only mortgages unless someone can explain to me the advantages vs repayment.

I want to borrow £100K on £170K property value, which is 60% LTV.

Scottish Widows Offset
2 year variable rate, currently 3.09%, £999 arrangement fee - repayment mortgage.

First Direct Offset
2 year tracker, currently 3.09%, £499 arrangement fee - interest only mortgage.

You could try invest the extra money in something that is going to give a better return that 3.09% and they pay it off in a lump sum or possibly to keep your home payments low while you pay off a more expensive BTL or something. Have to do the sums carefully to get it right though.

I would expect however that both these are aimed at totally different markets rather than be compareable products.

http://www.money.co.uk/article/10056...erest-only.htm

[IR35 Avoider]

The other thing that puts me off First Direct mortgages are that they're interest-only mortgages unless someone can explain to me the advantages vs repayment.

Generally speaking there is nothing to stop you paying off the capital on an interest-only mortgage whenever you want to. (There may be penalty-clauses that stop you doing so for a while if you are getting any sort of fixed-term deal.) So in general a repayment mortgage is like an interest-only mortage with some of the flexibility about when to pay off the mortgage taken away.

An offset mortgage (which is what this thread is about) is one where not only can you pay off any amount whenever you like, you can borrow it back later on demand.

[Olly]

Ok, so first direct are £500 cheaper and that "puts you off"...hmmmm
I've taken out a FD mortgage v.recently and they look at company profit and base it on a multiple, I think the lady said up to 5 times!!
I did explain that company profit isn't my money and they'd be better to look at salary + divs, but it's profit they look at.

When you set up the mortgage they ask you how you want to pay the mortgage off and you tell them "capital repayment". They work out a monthly figure and that's it, that same figure is debited monthly from the associated FD current account. Any offset balance just lessens the term. Of course you can change the value of the monthly payment to suit.

P.S. If you're borrowing a small amount or have a lot of cash to offset with (poss through a director's) loan on May 01 for 21 months then is the fee free deal better?

If you're not going fee free remember to add the cost of closing the mortgage too, that can vary a fair bit.