Remortgage time...

[Legend83]

Our 5 year fixed deal expires shortly and I am trying to assess best course of action for us - possibly an Offset mortgage for the first time. Facts are:

- Outstanding mortgage £235k
- LTV 35%
- Current rate on fixed deal 2.99%

We have around £35-40k in savings but the wife is very risk-averse so the majority of this is in Premium Bonds...I have some legacy shares from a previous company I worked for but am looking to get shot and move the value to a Vanguard (or into the Offset if that works out the best approach).

Coventry do a full-term variable offset at 1.99% so thinking our circumstances lend well to this - we are making jack from our savings so makes sense to work them harder.

Think my plan of attack will be 1) set up offset 2) bung a bit of monthly each month into the offset 3) bung a bit of monthly into a Vanguard life-strategy.

Sensible, if not ground-breaking, approach?

[MOBB]

You should speak to Sarnie, the PH resident mortgage expert :-)

[g7orge]

MOBB said:

You should speak to Sarnie, the PH resident mortgage expert :-)

[Sarnie]

Thanks guys^^

OP, more than happy to help with this if you want to drop me a line..............one thing........extremely risk averse + variable rate, don't normally go together

[anonymous-user]

Legend83 said:

- Outstanding mortgage £235k
- Current rate on fixed deal 2.99%

We have around £35-40k in savings but the wife is very risk-averse so the majority of this is in Premium Bonds.

Do you need that much cash savings?

Let's have a look at 10% of your mortgage,

£23.5k of those "savings" is costing you,

• Mortgage interest cost = 23,500 x 2.9% = £702 p.a.
• Premium Bonds return, say, 0.5% = 23,500 x 0.5% = £117 p.a.

So by my arithmetic you're paying £585 p.a. to borrow 10% of your mortgage when you've already got that money.

What's more, if you pay 10% off the mortgage your monthly mortgage cost will reduce by about 10% - which may make you feel sufficiently confident to avoid "fixing" for the future and thus leave yourself flexible to pay more off the mortgage as and when you feel like it.

At the end of the day it's all a matter of personal taste but I just love the efficiency gained from paying down debt.

[Legend83]

Sarnie said:

Thanks guys^^

OP, more than happy to help with this if you want to drop me a line..............one thing........extremely risk averse + variable rate, don't normally go together

Thanks Sarnie, will do.

And yes I hear you... but it's only my wife that is risk-averse

[Legend83]

rockin said:

Do you need that much cash savings?

Let's have a look at 10% of your mortgage,

£23.5k of those "savings" is costing you,

• Mortgage interest cost = 23,500 x 2.9% = £702 p.a.
• Premium Bonds return, say, 0.5% = 23,500 x 0.5% = £117 p.a.

So by my arithmetic you're paying £585 p.a. to borrow 10% of your mortgage when you've already got that money.

What's more, if you pay 10% off the mortgage your monthly mortgage cost will reduce by about 10% - which may make you feel sufficiently confident to avoid "fixing" for the future and thus leave yourself flexible to pay more off the mortgage as and when you feel like it.

At the end of the day it's all a matter of personal taste but I just love the efficiency gained from paying down debt.

Is that not the benefit of having an offset mortgage? I can get a similar end result but have low-risk access to my cash in the event of an emergency?

[Legend83]

Legend83 said:

Thanks Sarnie, will do.

And yes I hear you... but it's only my wife that is risk-averse

Finally got round to dropping you a line!