Haven't been on mumsnet for ages - it's nice to see some familiar names after a gap of a few months.
I'm hoping that some of you have had experiences of the virgin one account or the First direct Offset mortgage or similar things as I'm thinking very hard about something along these lines. We would like to overpay - a bit (!!) to pay the mortgage off earlier and like the idea of these accounts - any advice anybody?? are they as good as they seem or should we shop around on the mortgage supermarket for a better deal?
Would love to hear your views as mumsnetters always know much more stuff than I do!! Help is needed!.....Thanks
We have a Barclays Openplan account with Mortgage Reserve and are very happy with it. It basically runs itself so we don't really have to worry about which account money is in.
An offset account is only really worth it if you have a healthy positive balance; otherwise, if you are refinancing, you'd be better off looking at discount mortgage rates, as the offset accounts are at the market rate. Lots of accounts let you make extra mortgage payments or to overpay on a regular basis.
If you have an offset account, you can still save some time and interest payments without paying off your mortgage capital, which is good if you like to have "savings". If you are clever with 0% credit cards, you can spend on these while keeping your own money in the bank earning tax-free interest for the few months that these deals run.
We have a First Direct offset mortgage and it works well for us. DH and I each have our own bank accounts plus we have a joint account (for household expenses, incl mortgage and childcare - we each transfer a set amount into it each month), and each of the accounts offset against the mortgage. When we took it out we cashed in our cash ISAs etc as we were getting a better rate (tax free) with the offset. We pay a fixed amount against our mortgage each month - more than the minimum - and keep / build up a healthy balance in our current accounts, so that the money is readily available if needed. It works for us because we have always had some savings and are sufficiently careful with our money. The disdvantage is that the rate is higher than some of the deals on the marketplace.
We have an Intelligent Finance offset mortgage and are very happy with it. The general wisdom seems to be that you need at least 50% of your outstanding balance in savings before it is in your favour to go with the higher rates of an offset rather than a discounted mortgage deal, but this will also depend on your tax bracket.
Ah....Azure, neither would we have 50% if it were not for those kind credit card people who keep giving us big chunks of interest free money, which we stack in our offset account and pay back the day before its due. At some times we have been 100% offset, all courtesy of mastercard and visa!
Azure you might be better off just transferring your mortgage to something with a really low rate but no penalties if you want to pay off a bit from time to time.
As others have said, these offset mortgages are only a good idea if you have really healthy savings and tbh why not just use those to pay off a chunk of mortgage and reduce your payments anyway.
The difference between the deals which are around and the market rate offered by the offset deals is very significant so your monthly payments would be a lot higher.
Don't be worried about moving your mortgage oas often as you like either. If you get a good deal for say 2 years, towards the end of that period just look around for the next good deal, especially if they're offering to pay any costs invilved in the switch, which lots of them do.
We've got a "flexible" mortgage with Standard Life, with a discounted rate. Its not an offset account (although I think that is an option) but we can pay extra chunks in whenever we like, and draw out again too, or skip payments when dh is not working. It means we never need a bank loan (the mortgage rate is always lower than the interest rate on a loan). We also have one credit card with a big chunk of interest-free money on it that we've just stashed in the mortgage. I can manage one of those at a time!
we have a virgin one mortage,by Royal bank of Scotland.Its worked well for us and it is nice seeing mortage go down.Think this type of mortage is only suitable if you do not go overdrawen each month.Works well if you can leave extra in it month.Now we have absolutly no savings as everthing is put in to the mortage account.Hopefully mortage will be paid off early and we will have saved lots on interest
we have a oneaccount too. It is great as you can buy a new car in your lunchbreak with your switchcard. We have our own business which means that we only get paid once a year and then get steadily more overdrawn until next dividend. If your income and expenditure vary wildly then the extra interest charges are worth it for the flexibility.