Offset Mortgage?

[OffsetQ]

Has anyone here got an offset mortgage and would you recommend it?

Our situation is this. We've recently had an unexpected inheritance which, together with some of our savings, would be enough to pay off the mortgage when the current fixed rate expires in a few months. However we've also got children at private school with the eldest starting the exam years and the youngest just starting high school. The money would be close to enough to get them all the way through school (allowing for some pessimistic inflation increases). We've always kept a reasonable buffer for fees in cash but it would be an incredible peace of mind to know that the fees were 'banked'. We're thinking that we might get an offset and put the full amount in the attached saving account so it was essentially 'paid off'. We could then choose to either leave it like that or draw on the money for fees if we needed it or felt it was the best financial decision at the time.

Would be intersted in any views if anyone has done anything similar. We were looking at the Coventry BS fixed rates. Thanks v. much

@Voice0fReason

I don't know what the current deals are because we took ours out many years ago. It was one of the best decisions I ever made. Saved us a load of money and took years off the mortgage. The flexibility to manage big expenditures like a new car or work on the house without having to finance it. You do need to be good with your spending so you are always keeping on track to pay it off when you aim to. No downsides for me.

Absolutely the same for us, also a good few years ago. Really one of the best decisions we made but that’s very much speaking for ourselves.

@OffsetQ I hadn't heard that myself, so cannot comment on the unused portion of the mortgage.

I am not sure also about paying the mortgage direct from the offset, you are best asking them direct. They have always been helpful when we spoke to them. We have just kept an eye on it so we know when to draw funds out.

(As for my pension, we are looking into a SIP but until I go to work, it's hard to pay into it. We would use some of the offset money to pay in or buy a pension later)

Yes we have one (Yorkshire building society) which just offsets savings and have previously had one with First Direct that you could link to your current account too. The YBS lets you link another person's YBS savings to yours (with their agreement obviously) so their money offsets your mortgage.

It has been brilliant, we are paying off faster than we would have done otherwise and were completely offset briefly last year just before making a big purchase.

I would recommend it.

We did - it was great. The one we had allowed us to offset our cash isas as well (we moved them to the banks isas) so we really reduced our term.

We moved, needed the savings to upgrade and rennovate but when we remortgage we will probably do it again

We had a retail business that covered its costs for 9 months of the year, and made all its profit in the final 3 months with Christmas. We took out a Virgin One Account mortgage in 1999, I think, and by putting our Christmas takings into the account, it made us mortgage free for about 6 months, and then the mortgage debt slowly grew until the Christmas business kicked in. The Virgin One Account was a now defunct, account that combined a Mortgage, a Current Account and a Savings account in one. It worked very well for us, and enabled us to buy a car from it without having to go through the palaver of organising a separate loan. It saved us a bucket load of business bank fees, because we didn't have a business overdraft. My husband did the accounts for the business and it made it a little more complicated to balance the ledger, but once he got a system set up on Sage it became routine. We even increased the facility level when my inlaws wanted to move into a retirement flat and use it to give them a couple of months to get the flat ready for them to move into and to avoid the moving day panic. The downside is that you have to be very disciplined and not keep spending up to the top level you are allowed to, but with spreadsheets it is easy to keep a weekly record and compare the position annually to ensure you are on track to pay it off. We also managed to pay it off fairly early due to the reduced amount we paid in interest. best thing we did,