I have £130,000 mortgage. I deposit £129,000 into the savings pot. Does the mortgage still run for the full term? I just want to offset a big chunk of the interest.
2007-09-12 20:12:30 · 3 answers · asked by Moneyloser 2 in Business & Finance ➔ Personal Finance
MOST off-set accounts are Repayment (as opposed to Interest Only) and give you a choice
1) 'Reduced Term'
2) 'Reduced payments'
If you go for 1), then the normal monthly payments will be taken (on a 130k mortgage this will be about 1.5k per month) which will reduce the term.
You are effectively paying no Interest, so the Mortgage will finish after approx 130k/1.5k == 87 months (i.e. about 7 1/2 years)
If you go for 2), then they reduce your monthly payments and keep to the same term.
So if the Mortgage is due to run for another 25 years, then (as you are paying no Interest) your Monthly payments will be reduced to 130k / (25 x 12) = approx £500.
2007-09-12 20:45:42 · answer #1 · answered by Steve B 7 · 0⤊ 0⤋
You can put a large deposit into your offset account and still keep it running, although it will no longer be for the full term. You will not be charge interest on a monthly basis, so you will be paying off the principal of the mortgage instead and this will reduce the term.
You should read the mortgage contract that you have as some offset mortgages will not allow you to offset so much and will require that you settle the mortgage instead.
2007-09-12 22:40:13 · answer #2 · answered by bumblingbeermonster 3 · 0⤊ 0⤋
Hi,we are with the RBS.I did not have the amount of money you have got all I can tell you is my experience.It took 5 years to pay our mortgage off.Every month i paid what extra I could off it & I had a right carry on.They kept reducing the payment so i paid more.The last 2 years the bank tried every thing to stop us paying off the mortgage.Why we saved a fortune in interest rate.At the moment savers are not getting much interest.I would with out any doubt pay the mortgage off.
2016-05-18 03:45:58 · answer #3 · answered by Anonymous · 0⤊ 0⤋