Interest Rates - can someone explain what...

[Coalman]

can you explain to me exactly what "offset tracker mortgage 0.5% above base rate" actually means..

ok, i understand an offset mortgage compares the balance of savings against the balance of the mortgage owed (lets call this result balance due), but what about the 2nd part? is that you pay interest on the balance due of 0.5% above base rate (currently 1%) i.e you pay 1.5%? am I right in my calcs?

Yes Chef - you do pay 1.5%.
Currently the best tracker mortgages are about 2% above base rate so not as good.

C&G did a mortgage 1.01% BELOW base rate - i.e. no interest as they capped it a 0% - they should be paying these people interest!.

[Cyberman]

¿Does your Ltd company pay into that on your behalf?

No. Mine was paid from salary. I'm not sure of the rules nowadays because I stopped paying in a few years ago. The bottom line is that all payments are tax free.
I think that if your company pays there are fewer restrictions on the annual amount, whereas with salary, unless you have special dispensation from HMRC you can only pay up to 100% per annum, so if you are paying a very low salary it is very restrictive.

[Bear]

Until the mortgage is paid off!!

I spoke to the abbey the other day on this. She told me to guard this product like it were hens teeth, offset tracker 0.5 above the base for the life of the mortgage.

I've got one of those!!

0.49% above base for life with an offset account

I've also got one which is 0.19% above base but that ends in about 18 months

[scooterscot]

can you explain to me exactly what "offset tracker mortgage 0.5% above base rate" actually means..

ok, i understand an offset mortgage compares the balance of savings against the balance of the mortgage owed (lets call this result balance due), but what about the 2nd part? is that you pay interest on the balance due of 0.5% above base rate (currently 1%) i.e you pay 1.5%? am I right in my calcs?

You got it. Offset - anything in the saving's pot will reduce the interest owed, however, the added benefit is that the savings can be used to pay off outstanding mortgage. All the while we pay 0.5% above the base rate until the mortgage is paid off.

[scooterscot]

Yes please do buy up LOTS of new BTL flats. Then when you go bankrupt in 18 months they'll all flood onto the auction market and I'll be able to pick them up at pennies on the pound.

It's a Victorian house - would not touch a new build with a 20' barge poll.

[scooterscot]

I've got one of those!!

0.49% above base for life with an offset account

I've also got one which is 0.19% above base but that ends in about 18 months

Yes that's the one!

If I'm honest it was pure luck. It is jammy mortgage with jammy bits on it, even the small print is jammy.