Offset Mortgage question
Discussion
Hi All,
Been thinking for a bit about how offset mortgages would work and have two questions:
1) If I’m looking to buy a house worth £500,000 and I have that amount in the bank but want it liquid and accessible could I get a mortgage based on those savings even though my income is very low?
2) Given that I indeed could, what would happen if I had to take out £250,000 from the offset mortgage? Are you allowed to do that and if so what would it do to the rates?
Bonus question) if the above situation is true what’s the best way of buying the house but keeping finances liquid?
Thanks!
Been thinking for a bit about how offset mortgages would work and have two questions:
1) If I’m looking to buy a house worth £500,000 and I have that amount in the bank but want it liquid and accessible could I get a mortgage based on those savings even though my income is very low?
2) Given that I indeed could, what would happen if I had to take out £250,000 from the offset mortgage? Are you allowed to do that and if so what would it do to the rates?
Bonus question) if the above situation is true what’s the best way of buying the house but keeping finances liquid?
Thanks!
Henrico said:
Hi All,
Been thinking for a bit about how offset mortgages would work and have two questions:
1) If I’m looking to buy a house worth £500,000 and I have that amount in the bank but want it liquid and accessible could I get a mortgage based on those savings even though my income is very low?
2) Given that I indeed could, what would happen if I had to take out £250,000 from the offset mortgage? Are you allowed to do that and if so what would it do to the rates?
Bonus question) if the above situation is true what’s the best way of buying the house but keeping finances liquid?
Thanks!
1) No, your income needs to be able to afford a £500k mortgage in the normal way.Been thinking for a bit about how offset mortgages would work and have two questions:
1) If I’m looking to buy a house worth £500,000 and I have that amount in the bank but want it liquid and accessible could I get a mortgage based on those savings even though my income is very low?
2) Given that I indeed could, what would happen if I had to take out £250,000 from the offset mortgage? Are you allowed to do that and if so what would it do to the rates?
Bonus question) if the above situation is true what’s the best way of buying the house but keeping finances liquid?
Thanks!
2) All that would happen would that you would then be charged interest on the £250k that was no longer offset, no change to the rate.
Sarnie said:
You have to forget about your savings, the mortgage you can obtain is based on your income and affordability............it doesn't matter how much you have in savings............
Off topic, but on the above point, do they still do "non status" mortgages. So if I were buying a £2m house, and only wanted a mortgage for £500K, would I still need the salary to meet the requirements for a £500K mortgage? If so, why do they care? If I can't afford to pay, the house gets sold, and they get what they are owed anyway. TwigtheWonderkid said:
Off topic, but on the above point, do they still do "non status" mortgages. So if I were buying a £2m house, and only wanted a mortgage for £500K, would I still need the salary to meet the requirements for a £500K mortgage? If so, why do they care? If I can't afford to pay, the house gets sold, and they get what they are owed anyway.
Yes, you'd still need the required salary for a £500k mortgage, no matter what the value of the property.Mortgage lenders business models do not involve repossessing properties, which is a length and expensive process.......
anonymous said:
[redacted]
If he got a £250k mortgage for a £500k house he would need to use his £250k savings to pay the balance of the purchase price. It would be easier for the OP to get a £250k mortgage but the downside (compared to getting a £500k offset mortgage) is that he won't have £250k to dip into if he needed to.
One of the thin lines you must tread when applying for an offset mortgage is that your repayment vehicle needs to be good, but not too good. If you tried to get a 500K offset and said your repayment vehicle was cash in a savings account, they won't lend. The thing they try to protect against is you fully offsetting the mortgage on the day you get it. This means that you have an open facility to borrow 500k at a very good rate, anytime you please for the duration of the mortgage.
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