Offset Mortgage Payments Question

[riz1]

I would appreciate some clarification.
I have an offset tracker mortgage with West Brom
It was for £60k. My payment at 4.5% came to around £400pm, reducing by about £15 after the last 0.5% rate cut.

Now, within the past 4 months I have put about about 1/3 of the total mortgage value in the linked offset saving account [sadly at least 60% of this will be used to pay my tax bill so I am not actually reducing the mortgage until after 31st Jan].

Anyway the monthly payment has not altered at all in relation to how much is in the savings account.
So, if I am only taking interest on 2/3 of the total mortgage amount, does that mean that a greater proportion of the monthly DD is going towards reducing the actual loan burden?

[cjanderson]

as long as its daily interest (and can't think of many offsets that would not be), then you'd be accuring less interest as you owe less. But as you are paying the same amount, you are in affect overpaying until they adjust your interest payment.

[riz1]

See that is what I thought but they haven't adjusted my payments until the last rate change despite there being over £10k in there for over 3 months....:shrug:

[Kryten]

I asked them about this as I am offsetting almost 50% of my mortgage too alredy. The monthly payment will go towards capital but you are not changed overpayment charges if you overpay more than 10% that is officially allowed in the first year.

The offset will not change the monthly payments, only interest changes will. All it will effect is how much of the actual capital you are paying back :)

[riz1]

Good stuff. This is how I would prefer it anyway.
Thanks mate.

[Kryten]

:) Yeah, it was the way I wanted it too! The only thing I would love would be internet banking on this showing real time what you owed etc. I have a spreadsheet where I work it out though which is good as it shows me how long until I pay it off :D

[riz1]

yes I have to admit the having to call up to check balances etc is a bit of pain.
Still - it's otherwise ALL good:thumbs:

[Kryten]

I must phone them actually, I know how much should be there but have not called to check it is all getting there :eek: