Reply to: Offset Mortgages

[MPwannadecentincome]

I have been put off Offsets after my experience using VirginOne.

Everything was great whilst I had savings, then as they dwindled away due to increasing tax, council tax, bills and other expenditure whilst a permie I could not work out why even with some savings my monthly interest deducted times 12 was more than the headline % interest rate.

It turned out that I was being charged interest on interest on a daily basis during the month until the interest payment was taken. This took the rate I thought I was paying (can't remember the exact figure but approx 6.25%) to a more than 7%!

So not only was the interest rate high already in reality it was more!

I don't know if First Direct or IF or Woolwich calculate interest in this way. I asked Virgin for an "Effective Annual Rate" but they could not provide me with one.

[GreenerGrass]

Well, got accepted within a couple of weeks by First Direct with no problems, didn't even have to show them a contract.
But there was evidence of the credit crunch - the external house valuation was 10% under the peak 2007 value, as I expected really.

Once I have enough in ISAs etc. to last for a couple of years without work (and for a BTL/BTS deposit in 2011) I might stop adding to them and concentrate on paying down the mortgage, and stick just enough in the SIPP to avoid utter poverty.
At least you get a guaranteed tax-free return (in effect) paying down the debt without gambling on whether Moneyweek are right about something.

[NickNick]

Wow! Mine only took a week or so. I know they got a huge increase in applications following the credit crunch and had to stop new applications so they could clear the backlog. It was all over the news at the time. Maybe you got caught up in that. But I've banked with them for about 15 years and 99% of the time get amazing customer service and efficiency. Stick with them and I am sure you won't be disapointed. No excuse for the 8 months though!

Been with them since they just after they started up in around 1991. I was working at Midland Bank at the time, when it became HSBC. So it's not like I dont have history. The missus has been with them for well over 10 years, and the offset is only for 25% of the (current) value of the house. Like you say there is no excuse for the time, but with the deal they are offereing, what can I do?

[oracleslave]

Strangely perhaps, I don't like that. I don't see it as good wishes from a friend, or even from long-time business associate, more a reminder that some complete strangers have personal information on me, and don't mind using it for purposes other than those for which I gave it to them.

WHS!

[DimPrawn]

I think it would be mad as contractor (with variable income) not to have a flexible and offset mortgage, and not to have a desire to overpay and clear the debt as soon as possible and know that if you fall on hard times you can ramp back the payments to a trickle.

It the only way to go, and enabled me to pay off my mortgage completely in < 7 years and then use the equity to build and sell of a BTL empire that has left me now with a large wedge of cash and no mortgage.

If I'd been stuck with a traditional mortgage there's no way I could have done this.

[expat]

And if you happen to phone on your birthday they say "Before we continue may I just wish you a very happy birthday"

Strangely perhaps, I don't like that. I don't see it as good wishes from a friend, or even from long-time business associate, more a reminder that some complete strangers have personal information on me, and don't mind using it for purposes other than those for which I gave it to them.

[GreenerGrass]

I've just applied for an offset tracker through FD, will see what happens. My previous mortgage broker said he couldn't beat it, even the fees are low.

[Lewis]

Just out of interest for any of you, I've just got my confirmation of an offset mortgage through FD. That was 8 months from filling in the application form to getting approval. Wonderful service that. ;o)

Wow! Mine only took a week or so. I know they got a huge increase in applications following the credit crunch and had to stop new applications so they could clear the backlog. It was all over the news at the time. Maybe you got caught up in that. But I've banked with them for about 15 years and 99% of the time get amazing customer service and efficiency. Stick with them and I am sure you won't be disapointed. No excuse for the 8 months though!

[NickNick]

FD Offset

Just out of interest for any of you, I've just got my confirmation of an offset mortgage through FD. That was 8 months from filling in the application form to getting approval. Wonderful service that. ;o)

[minstrel]

Did you go direct or through a broker?

As a contractor (assuming you are ) what did they require as proof of earnings - last year's accounts or a current contract?

They haven't asked for anything yet. Advisor on the phone said previous accounts would be fine. I also bank with FD and have business accounts with HSBC which might help.

Interestingly, the underwriter asked for my HSBC business account details before agreeing in principle, so it looks like FD mortgage people have access to HSBC accounts (or maybe it's just a single central HSBC underwriting department).

[minstrel]

You're lucky the rate rose to 5.99% a few days ago.

I know - I booked it last week. Phoned them up to double check I'd got it in time. Thankfully I did

[al_cam]

Had an offset mortgage for 5 years now.
With the large overpayments I can make every time I pay a dividend, I will pay it off in less than 2 years time, a full 10 years less than the original 25 year term.
The mortgage free goal being within touching distance is a great motivator to offset more.

As others have said - no need to change mortgage once a fixed rate has finished, no need to chase around finding the best investment and if I ever need to buy anything big, no problem - there is a huge reserve there which unlike most of the best investments, is not tied in.
I can also see online how much I owe and get a statement every 6 months showing how much interest I have saved through offsetting - always puts a smile on my face.

Only thing I wish I had done was got one of those current account mortgages so that every penny I had in the bank was offset rather than that which I transferred to the mortgage account

Al.

[Lewis]

Did you go direct or through a broker?

As a contractor (assuming you are ) what did they require as proof of earnings - last year's accounts or a current contract?

You can only go direct. They are contractor friendly. Copy of current contract should be fine. Call them to discuss they are very helpful.

[kali]

I've just booked a 2 year fixed offset with First Direct for 5.49%. I couldn't find any deals better than that - offset or otherwise...

You can also book FD remortgages up to 6 months in advance which is handy if you think rates are going to rise.

Did you go direct or through a broker?

As a contractor (assuming you are ) what did they require as proof of earnings - last year's accounts or a current contract?

[rawly]

You're lucky the rate rose to 5.99% a few days ago.

...and then to 6.15% They must be reading this Forum.