Offset mortgages

[Frimley111R]

I've got £100k and was going to put £50K into our mortgage and then invest £50K somewhere but offset mortgages seem a good idea as I will have access to the other £50k if needed. Also, our current account and business accounts held with the same bank will surely help out too. I know I am simplifying this a bit but by 'putting all out eggs into one basket' we must surely gain the biggest benefit?

[anonymous-user]

I've had an offset for a few years. No interest, so no tax to pay too. Keeps it simple..

[TwigtheWonderkid]

Offset mortgage is the best thing. I'm fortunate as the amount in my offset matches the amount I owe on the mortgage, so all I have to pay each month is the capital, divided by the number of months left on the mortgage.

Then on the first of December each year, my offset savings are over the mortgage by the amount of capital repayment during the last year, so I take that out and that pays for Xmas.

Although I still have a mortgage, psychologically I am mortgage free because I could clear it tomorrow if I chose to.

It's a weird arrangement but it works for me.

[98elise]

They are the best type of mortgage. Very tax efficient and you have full access to your money. The only downside is that if you are made redundant, then anything you have in there is savings rather than locked in your property.

[fandango_c]

98elise said:

The only downside is that if you are made redundant, then anything you have in there is savings rather than locked in your property.

Why is that a downside? Surely that's a positive.

The only downside is perhaps paying a higher interest rate compared to other mortgages.

[pablo36]

Means you can't claim benefits

[98elise]

pablo36 said:

Means you can't claim benefits

Sorry yes, i meant this. If you are paying capital off your mortgage then much like a pension, the money is locked in. If you are paying the capital part of your mortgage into an offset, then you would have to rely this before any benefits kicked in.

If you are depending on the offset savings as an investment vehicle to pay off your mortgage, then its a risk.

[e8_pack]

I've been thrifty for a few years now and bought my first home, I looked at offsets but I got a better interest rate with nationwide and no early repayment charges. Also my isa and savings are a better rate than my mortgage rate so i'm also quids in. I also have a 4k limit on my credit card so I might just put that in it as I pay that monthly in full anyway so I'll be a month ahead on payments, not sure I can get cash back doing that though!

[Frimley111R]

e8_pack said:

I've been thrifty for a few years now and bought my first home, I looked at offsets but I got a better interest rate with nationwide and no early repayment charges. Also my isa and savings are a better rate than my mortgage rate so i'm also quids in. I also have a 4k limit on my credit card so I might just put that in it as I pay that monthly in full anyway so I'll be a month ahead on payments, not sure I can get cash back doing that though!

I saw an article on these where the benefit financially was negligible which prompted me to ask this question.

[limpsfield]

I have had an offset for three years and am a fan.

What I also do it find a credit card with an interest free rate for purchases for as long as possible e.g. 12 months. Pay for as much every day spending as possible on the card, pay the minimum each month then pay it off at the end of the period. And then get another interest free card. More offsetting loveliness.

It is the only sensible bit of my finances - the rest I just fritter away like everyone else.

[westberks]

as a broker i mainly use these for higher rate tax payers with plenty of savings knocking around and surplus income to throw at the mortgage.

for higher loan to value clients where people have little in savings the 'best buy' rates are much better value than offset in most cases as you really need to use the facility to make it work properly.

very good for those that they suit; crap for those they don't.