Offset mortgage

[Little Plant]

Our bank has recently been in touch to offer us an offset mortgage � it seems like a great deal on the surface, can anyone advise of any down sides before we take the plunge and possibly regret at our leisure. We currently have an endowment mortgage � which will come to term in the next 5 years.

[EverClean]

Unless you have substantial savings to offset against the mortgage then these accounts are usually a waste of space. If you are looking for flexible mortgage features such as the ability to overpay and borrow this back then there are many better mortgage product that will let you do this and offer you a better rate. Ignore the calculator and tools they show you on their website and have a look at the rate they are charging you. Northern Rock in particular will allow you to pay money into your mortgage account (therefore not paying any interest on that amount) and then take it back. And they won't charge you the ridiculous rates that One Account and others do.

[Little Plant]

Thanks for that - EverClean - what amount of savings would you consider being a substantial amount?

[EverClean]

Sorry for the delay - I've been on holiday.

It depends on the size of the mortgage but i think you'd need to be looking at approx �50,000 to make the offsetting break even and then more than that to make it worthwhile.

[EverClean]

And even then Northern Rock and others (Woolwich springs to mind) would still make sense as you can pay in and withdraw. Have a good look around.