Reply to: Offset Mortgage

[BolshieBastard]

Does anyone have an offset mortgage ? Am due to re-m in May and am looking into these.

Is it possible to make overpayments with these accounts or by nature of offset is overpayment not necessary ? This is the query I cannot seem to find the answer to.
thanks.

Yep, had one for a few years now. Its great. I've effectively no repayments to make as I chucked all my spare money into it so the 'debt' is actually nil. I can make a draw down on the remaining mortgage of nearly 100k and the best is, I dont need any bank manager's or other lender's permission! That's doubly great i the current climate.

[ratewhore]

You'll also be looking at pretty low LTVs at the moment (according to those nice folks at contractormoney.com)

What LTV's are available through contractormoney at the mo?

[FarmerPalmer]

on the face of it that sounds like the most warped piece of financial logic I've heard in a while

Best current instant access rate is 3.5%:

http://www.moneysupermarket.com/savings/

3.5% gross - 40% tax = 2.1% net

v

(1% BoE + 1.09%) = 2.09%

OK So I'd be slightly better off - but how long will egg be paying 3.5% for ?
and then I'd have the 3 days where money is lost whilst it goes into that void between accounts whenever I transfer any money.

... so on the face of it ... I like my offset plan

[DaveB]

on the face of it that sounds like the most warped piece of financial logic I've heard in a while

It sounds warped but it's true.

Taking the current FD offset offer as an example, as a base rate tax payer you would need to get 3.6% ( or there abouts ) to earn an equivalent amount in interest on your savings as is being deducted from your mortgage interest payments. If you are paying higher rate tax it goes up to 4.92%.

[Olly]

So I effectively get (BoE Base Rate + 1.09%) tax free on all my monies

on the face of it that sounds like the most warped piece of financial logic I've heard in a while

[FarmerPalmer]

I have a Woolwich Offset Tracker (BoE Base Rate + 1.09%) with Barclays, arranged through Contractor Money.

I have a Mortgage Account, Current Account and Deposit Account.
Both my Current Account & Deposit Account are offset.

I pay a mortgage repayment assuming no offsets (plus some).
Every month they deduct interest from my mortgage account based on
Mortgage Balance - (Current Account Balance + Deposit Account Balance)

So I effectively get (BoE Base Rate + 1.09%) tax free on all my monies

If you have a reasonable amount of cash on deposit (essential in these turbulent times) then its a worthwhile transition.

[GreenerGrass]

Another here on the First Direct offset SVR. I was hoping they would at least pass on one of the last two rate cuts in order to reclaim having the lowest SVR of everyone. Fingers crossed we'll hear something in the next few weeks (by which time the base rate will be 0.5%...)

On the plus side I can't fault the customer service on the phone.

I am surprised their fixed rates are still so high.

[Little'Old Me]

Tracker with no penalties

I have a tracker with no penalties with BoS. I say that rather than the old HBOS, because within HBOS there were several different lenders! Its now part of Lloyds, but my paperwork still comes from BoS.

Its not the cheapest (0.95 over base), but when I checked the T&C's they must follow the Base Rate within 30 days. So far it has changed on the 1st of the month following any rate change.

The reason I choose this mortgage (I was very specific) was I wanted no penalties, so I can overpay the mortgage if I want, when I want. As long as I leave at least £1,000 owed, it continues. ) I did once have enough money to pay it off, but I knew I would need a big chunk of it again, so rather than pay it off and re mortgage, I left £1,000. My repayments dropped to a really silly amount!

It came with a cheque book, so if I need the money back at any time I can have it. I don't bother with emergency savings accounts - my mortgage is my emergency savings account - in fact any unspent money at the end of the month get transferred across automatically !

[Waldorf]

I have an offset with Standard Life and they have not fully passed on the rate cuts

I will try and remortgage when I get around to it

[Lewis]

Perhaps you need to get onto an FD Offset then then as I have had rate cut notices with a week and a half of the last 3 announced by the BOE.

Like I said. Not if you are on their Standard Variable Rate Offset. When I remortgaged my FD offset about three years ago they removed the clause that said "rate would not be more than 1% above BOE base rate". So anyone who has an FD offset which is not a tracker or fixed rate has NOT had a rate cut. You either have a mortgage older than around 3 years or you are on a tracker. Their SVR is currently 3.69% and since it was set at that there has been a further 1% drop in BOE base rate.

[Bumfluff]

Perhaps you need to get onto an FD Offset then then as I have had rate cut notices with a week and a half of the last 3 announced by the BOE.

And I doubt very much that you got "screwed over" by anyone. What is more likely is that you probabaly failed to : listen to the advisor/ read the terms or conditions and / or small-print properly, or decided to leap before looking*.

* - delete as appropriate until you find the one where I hit the nail on the head.

No I did listen, the problem is FD are the only lender to do equity buy outs in this way no other lender does it this way, even the guy at FD admitted they do because its 'easy for them to process'. I was only aware of it when I got the formal mortgage offer, but by that point I was already to far down the line to walk away.

[Svalbaard]

Yeah I agree with that First Direct have ignored the last 2 rate cuts on the SVR and said nothing.

They also screwed me over a bit, I had a joint mortgage with them in mine and my ex-partners name, I bought her out as an 'equity buy out', what they were not up front about what they call an 'equity buy out' isnt really an equity buy out, I had to take a brand new mortgage in my own name but they also classed it as a brand new purchase, end result being I had to have all the searches etc done again, as if I had never lived there, even though I live there already, total waste of £600 for the searches and additional legal fees. Then to add further insult I said if they want to do it that way, then its not a remortgage therefore I can take there tracker deal but they said no.

All in all though, First Direct to offer the best rates for off-setting.

Perhaps you need to get onto an FD Offset then then as I have had rate cut notices with a week and a half of the last 3 announced by the BOE.

And I doubt very much that you got "screwed over" by anyone. What is more likely is that you probabaly failed to : listen to the advisor/ read the terms or conditions and / or small-print properly, or decided to leap before looking*.

* - delete as appropriate until you find the one where I hit the nail on the head.

[Bumfluff]

No they haven't. The last two totalling 1% have been completely ignored for people on their SVR. No announcements nothing. There was a message saying "rates under review" online that disapeared and so I assume they have done their review and are no going to adjust their rates but they won't say that, have written to complain to see if I can get an answer. I would rather they said they are ignoring the base rate change than just say nothing.

Yeah I agree with that First Direct have ignored the last 2 rate cuts on the SVR and said nothing.

They also screwed me over a bit, I had a joint mortgage with them in mine and my ex-partners name, I bought her out as an 'equity buy out', what they were not up front about what they call an 'equity buy out' isnt really an equity buy out, I had to take a brand new mortgage in my own name but they also classed it as a brand new purchase, end result being I had to have all the searches etc done again, as if I had never lived there, even though I live there already, total waste of £600 for the searches and additional legal fees. Then to add further insult I said if they want to do it that way, then its not a remortgage therefore I can take there tracker deal but they said no.

All in all though, First Direct to offer the best rates for off-setting.

[Lewis]

First Direct service is still great also, no automated answering services and they have passed on all recent interest rate cuts to their customers.

No they haven't. The last two totalling 1% have been completely ignored for people on their SVR. No announcements nothing. There was a message saying "rates under review" online that disapeared and so I assume they have done their review and are no going to adjust their rates but they won't say that, have written to complain to see if I can get an answer. I would rather they said they are ignoring the base rate change than just say nothing.

[moorfield]

+1