Whichever Option You Choose, You Can Still Be a Winner With Your Mortgage - Mortgages - News - Moneyfacts

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Whichever Option You Choose, You Can Still Be a Winner With Your Mortgage

Whichever Option You Choose, You Can Still Be a Winner With Your Mortgage

Category: Mortgages

Updated: 31/10/2008
First Published: 12/01/2006

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Rachel Mckay, Mortgage analyst from moneyfacts.co.uk comments on offset and current account mortgages and the options available to consumers:

"Although your current financial circumstances may prevent you from taking advantage of offset or current account mortgages, don't dismiss them completely, as with professional financial planning, they may still prove to be a beneficial option to consider in the future.

"Even if an offset mortgage or current account mortgage doesn't work for you at the moment, you can still save yourself money by taking out a low rate fixed or discounted deal.

"By shopping around for a good deal for the first couple of years of your loan, you will be keeping your repayment costs to a minimum. At the end of your initial deal, your income may have increased and your financial situation improved, thus making it worth looking at the possibility of using savings or making overpayments to reduce your mortgage interest costs and/or mortgage term.

"Consumers should keep an eye on the best buy tables or mortgage comparison websites, and ensure they regularly seek independent financial advice to ensure the right mortgage vehicle is used to suit their individual circumstances." The scenarios below highlight the range of products available and the potential savings benefits available to consumers.

Scenario A:
OFFSET £100k Mortgage over 25 years at 5.24%
Monthly Repayment £599.85

Savings used to offset mortgage£5000
Additional monthly savings£50 per month
Cost of mortgage payments over 2 years£14396.40
Interest saved over term of mortgage£22688.81
Reduction of mortgage term due to offset3 years and 1 month

Scenario B:
OVERPAYMENT £100k mortgage over 25 years at 5.24%
Monthly repayment £599.85

Savings used to offset mortgageNil
Additional monthly savings£50 per month
Cost of mortgage payments over 2 years£14396.40
Interest saved over term of mortgage£17052.17
Reduction of mortgage term due to offset5 years and 9 months

Scenario C:
FIXED RATE DEAL £100k mortgage over 25 years Initial 2 year fixed deal at 4.38%
Monthly repayment £548.51

Savings used to offset mortgageNil
Additional monthly savingsNil
Cost of mortgage payments over 2 years£13164.24
Interest saved over term of mortgageN/A
Reduction of mortgage term due to offsetN/A
Saving on repayments over 2 year period£1232.16

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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