Offset Mortgage

[knk]

I have had an offset mortgage with First direct for about 15yrs. I really like the concept, especially now rates are so low on savings, Having a facility that is cheap and easy to access is handy.

The rates from FD are becoming much less appealing and I think they may be withdrawing the product.

Any other opinions or experience?

[kashn]

Coventry BS doing 5 year fixed offset at 2.15%

[fiatpower]

I'll be looking for an offset mortgage when my remortgage is up in 3 years.

[knk]

kashn said:

Coventry BS doing 5 year fixed offset at 2.15%

They are doing some very good rates.1.39% fixed for 2 yrs.

[cashmax]

knk said:

I have had an offset mortgage with First direct for about 15yrs. I really like the concept, especially now rates are so low on savings, Having a facility that is cheap and easy to access is handy.

The rates from FD are becoming much less appealing and I think they may be withdrawing the product.

Any other opinions or experience?

If you already have it then withdrawing it wouldn't' be an issue for you.

I too have been looking around but getting a new offset over the line has become much more tricky as I understand it. As a consequence of selling my company I was fortunate enough to be able to fully offset the mortgage a few years ago and the bank have written to me on a number of occasions offering my hard cash to close the mortgage. I'm assuming that the new regs after 2007/08 require them to hold the equivalent hard cash, should you every wish to exercise your check book, hence the reticence to provide new offsets.

[PorkInsider]

cashmax said:

knk said:

I have had an offset mortgage with First direct for about 15yrs. I really like the concept, especially now rates are so low on savings, Having a facility that is cheap and easy to access is handy.

The rates from FD are becoming much less appealing and I think they may be withdrawing the product.

Any other opinions or experience?

If you already have it then withdrawing it wouldn't' be an issue for you.

I too have been looking around but getting a new offset over the line has become much more tricky as I understand it. As a consequence of selling my company I was fortunate enough to be able to fully offset the mortgage a few years ago and the bank have written to me on a number of occasions offering my hard cash to close the mortgage. I'm assuming that the new regs after 2007/08 require them to hold the equivalent hard cash, should you every wish to exercise your check book, hence the reticence to provide new offsets.

Interesting! I didn't realise offsets were harder to come by these days.

I also fully offset the mortgage purely for the peace of mind that if ever a six-figure sum were needed quickly it's sat there ready to draw out with a very low interest rate, and in the meantime isn't costing a bean.

I'm quite surprised more people don't do it, rather than falling over themselves to close mortgage accounts down as quickly as they can when they have the cash available.

[Sarnie]

PorkInsider said:

Interesting! I didn't realise offsets were harder to come by these days.

I also fully offset the mortgage purely for the peace of mind that if ever a six-figure sum were needed quickly it's sat there ready to draw out with a very low interest rate, and in the meantime isn't costing a bean.

I'm quite surprised more people don't do it, rather than falling over themselves to close mortgage accounts down as quickly as they can when they have the cash available.

Because most people would not be able to trust themselves to access to their full property's equity at the drop of a hat.

Around 15 years ago when the old Drawdown mortgages were available, I used to see clients paying monthly bills from their drawdown account!!

[PorkInsider]

Sarnie said:

PorkInsider said:

Interesting! I didn't realise offsets were harder to come by these days.

I also fully offset the mortgage purely for the peace of mind that if ever a six-figure sum were needed quickly it's sat there ready to draw out with a very low interest rate, and in the meantime isn't costing a bean.

I'm quite surprised more people don't do it, rather than falling over themselves to close mortgage accounts down as quickly as they can when they have the cash available.

Because most people would not be able to trust themselves to access to their full property's equity at the drop of a hat.

Around 15 years ago when the old Drawdown mortgages were available, I used to see clients paying monthly bills from their drawdown account!!

Fair point, but surely there are a good number of non-impulsive people around who can resist blowing their home's value on a whim, too?

(Appreciate you'll see what happens with people's finances from a different perspective, of course.)

[Sarnie]

PorkInsider said:

Fair point, but surely there are a good number of non-impulsive people around who can resist blowing their home's value on a whim, too?

(Appreciate you'll see what happens with people's finances from a different perspective, of course.)

Not really.

I've probably come across maybe 3 or 4 clients in nearly 20 years, who had funds fully offsetting their mortgage balances in full.

Most people like the idea of it and have some spare funds that ultimately are earmarked for other uses, so the funds are moved out of the Offset account and the client is left with an expensive mortgage with a facility they aren't using, hence why they are fading away.......

Edited by Sarnie on Friday 12th March 14:07

[Burrow01]

Sarnie said:

PorkInsider said:

Fair point, but surely there are a good number of non-impulsive people around who can resist blowing their home's value on a whim, too?

(Appreciate you'll see what happens with people's finances from a different perspective, of course.)

Not really.

I've probably come across maybe 3 or 4 clients in nearly 20 years, who had mortgages fully funds fully offsetting their mortgage balances in full.

Most people like the idea of it and have some spare funds that ultimately are earmarked for other uses, so the funds are moved out of the Offset account and the client is left with an expensive mortgage with a facility they aren't using, hence why they are fading away.......

Interesting, we are on our second offset mortgage, with FD and are now close to paying it off. Sounds like I should keep it open for the next 3 years "just in case" if FD are withdrawing them.

[cashmax]

Burrow01 said:

Sarnie said:

PorkInsider said:

Fair point, but surely there are a good number of non-impulsive people around who can resist blowing their home's value on a whim, too?

(Appreciate you'll see what happens with people's finances from a different perspective, of course.)

Not really.

I've probably come across maybe 3 or 4 clients in nearly 20 years, who had mortgages fully funds fully offsetting their mortgage balances in full.

Most people like the idea of it and have some spare funds that ultimately are earmarked for other uses, so the funds are moved out of the Offset account and the client is left with an expensive mortgage with a facility they aren't using, hence why they are fading away.......

Interesting, we are on our second offset mortgage, with FD and are now close to paying it off. Sounds like I should keep it open for the next 3 years "just in case" if FD are withdrawing them.

I have heard they have also made "offers" to those who have been fully offset for a while.

[LeoSayer]

cashmax said:

I have heard they have also made "offers" to those who have been fully offset for a while.

We've been fully offset via interest only mortgage with FD for years but have found the facility very useful on occasion.

FD wrote to me earlier this week to effectively say "Send your credit balance elsewhere if you want to earn interest". I get those letters every few months.

What are these offers you speak of? I think our mortgage terms is for at least another 10 years.

[MaxFromage]

I currently have an offset with Chelsea BC and will be taking on a new one with Standard Life when we move. Mortgage will be doubling but it'll be offset with a 75% cash balance. Then if an opportunity arises, the cash is there. Wouldn't do it any other way.

[Casa1862]

I've got an offset with The Coventry, it's a full term product and currently 2.09%, it USED to be a BOE tracker in all but name but the last BOE rate cut was not passed on, every other one has, annoyed at this I proceeded to top up the offset saving account as much as I could, still got 17 years of the mortgage term left but now only a few K off being fully offset, rates going up or down will make no difference now.

At the moment mortgage is virtually at 0% interest rate, however beginning to think if I should start drip feeding some of the offset balance into a pension or S&S isa, it needs to do better that 2.09%, however benefit at the moment is the money is not a risk (unlike S&S), instant access to funds, shielded from interest rate movements, no tax to pay or form filling, at the end of the 17 years I've have my mortgage paid and have the offset funds. I don't feel the need to spend the funds.

[knk]

I had the FD offset mortgage fully offset by savings in my previous house, and managed not to spaff all the savings away.
I now have about £200k net debt on the mortgage less offset savings.

I put £20k/y into ISA funds from savings at the start of each financial year and have a DB (and non-contributory) pension which is approaching LTA and costs me a good chunk of AA tax each year.
I guess I am not too worried about lost opportunity cost so really just need to work out how much the higher rates cost me compared with the security and flexibility of having the savings in an offset rather than just paying down the mortgage.