Abbey Flexible Plus Mortgage Questions

Hi all

We have an *offset* mortgage package from Abbey that tracks the BoE base
rate + 0.49% for the life of the mortgage. It's a 100K mortgage over 25
years.

We got it last December and have currently managed to get around 37K into
the "savings pot" that goes along with it. Abbey's online details for it,
currently show it as having:
total repayments: £81.7K
total interest: £19.8K
loan term: 11 yrs, 9 mths

(These numbers obviously jump up and down depending on much money moves into
or out of the savings pot).

I've yet to work out whether this means the mortgage *will* be paid off
after just 11 years (assuming no change to the savings pot), or that it
*could* be paid off after 11 years if we used those savings to pay off
capital.

However, my main question/worry at the moment is this...assuming no other
changes; at the end of the mortgage term (be it 11 years or 25 years), will
we still have the 37K in the savings pot or will we be left with a) no
mortgage, but b) no savings?

Thanks for any advice.

Doehead wrote:

> We have an *offset* mortgage package from Abbey that tracks the BoE base
> rate + 0.49% for the life of the mortgage. It's a 100K mortgage over 25
> years.
>
> We got it last December and have currently managed to get around 37K into
> the "savings pot" that goes along with it. Abbey's online details for it,
> currently show it as having:
> total repayments: £81.7K
> total interest: £19.8K
> loan term: 11 yrs, 9 mths
>
> (These numbers obviously jump up and down depending on much money moves
> into or out of the savings pot).
>
> I've yet to work out whether this means the mortgage *will* be paid off
> after just 11 years (assuming no change to the savings pot), or that it
> *could* be paid off after 11 years if we used those savings to pay off
> capital.
>
> However, my main question/worry at the moment is this...assuming no other
> changes; at the end of the mortgage term (be it 11 years or 25 years),
> will we still have the 37K in the savings pot or will we be left with a)
> no mortgage, but b) no savings?

Couldn't say. It would be interesting to discover on what basis they
calculate this "term". Are there regular funds flowing into the non
savings pot part of it? Are they of the order £82.8k divided by 11.75
years, i.e. around £587 per month?

It could well mean that they consider the £37k as "paid off" the £100k,
leaving you to clear a further £63k balance over the course of the next
11.75 years, during which time you would expect to pay £19.8k interest
on the reducing £63k debt, plus the £63k itself, of course, making a
total of £82.8k (or £81.7k allowing for rounding errors).

So yes, in that case, I think it probably means that over 11.75 years
the level of your regular payments would reduce your interest-costing
debt from £63k to zero, or put another way, your total debt of £100k
would have reduced to the value of your savings pot. At that time
you could then decide whether to use the savings to pay off the
remaining debt, or to continue making payments, but you wouldn't be
charged any more interest, though you would presumably start to earn
savings interest on that part of your savings pot which exceeds your
remaining loan debt.

"Ronald Raygun" <> wrote in message
news:4ikCg.1072$ ...
> Couldn't say. It would be interesting to discover on what basis they
> calculate this "term". Are there regular funds flowing into the non
> savings pot part of it? Are they of the order £82.8k divided by 11.75
> years, i.e. around £587 per month?

Yes, the monthly payments are currently £584 per month.

Doehead wrote:
> "Ronald Raygun" <> wrote in message
> news:4ikCg.1072$ ...
> > Couldn't say. It would be interesting to discover on what basis they
> > calculate this "term". Are there regular funds flowing into the non
> > savings pot part of it? Are they of the order £82.8k divided by 11.75
> > years, i.e. around £587 per month?
>
> Yes, the monthly payments are currently £584 per month.

I have the same mortgage: Abbey changed it to interest only without
telling me.
Monthly payments are fixed based on the interest for the total loan
amount and take no account of the offset amount. It gets complicated
because the monthly payments are no longer the true interest so some
excess goes into capital repayments which are different to the offset
pot.

Previously with the same mortgage I achieved the happy state of affairs
of zero balance.
This of course meant no more monthly payments. It could be at the end
of the term you need to redeem/re-mortgage (so more fees to pay..). But
I recall the newer versions of this product are marketed as 'lifetime
mortgage'.