• We are pleased to announce that the winner of our Feedback Prize Draw for the Winter 2024-25 session and winning £150 of gift vouchers is Zhao Liang Tay. Congratulations to Zhao Liang. If you fancy winning £150 worth of gift vouchers (from a major UK store) for the Summer 2025 exam sitting for just a few minutes of your time throughout the session, please see our website at https://www.acted.co.uk/further-info.html?pat=feedback#feedback-prize for more information on how you can make sure your name is included in the draw at the end of the session.
  • Please be advised that the SP1, SP5 and SP7 X1 deadline is the 14th July and not the 17th June as first stated. Please accept out apologies for any confusion caused.

Q+A Bank 3.4

S

Snowy

Member
1) How do we get $30,000 as the point to switch to the offset mortgage?

2) How do we know that the one-off £150 is paid 1 year after customers switch to the new mortgage?
 
You can work this out by trial and error or algebraically.

If you have no savings, you currently pay £7250 interest and receive no interest from savings. You would pay £8000 under the new scheme plus the £150 fee. Stick with the current scheme.

If you have £30,000 in savings, you currently pay £7250 and receive £1500 interest on your savings (a net payment of £5750). You would pay interest on £70,000 under the new scheme (£5600) plus a fee of £150 (total of £5750). Same as current scheme.

If you have £50,000 in savings, you currently pay £7250 and receive £2500 interest on your savings (a net payment of £4750). You would pay interest on £50,000 under the new scheme (£4000) and pay £150 fee (£4150). Go for the new scheme.

Alternatively, 7250 - 0.05x = 0.08 (100,000 - x) +150 to get x = 30,000.
 
Hi,
two questions again:
1) how come we don't offset the 5% interest on both the standard mortgage and the offset mortgage here - in other words, they would just cancel out.

2) can the individuals switch between the products more than once?
 
They are two different schemes.

Under the standard scheme, your mortgage and your savings are entirely separate: you pay 7.25% ie £7250 each month for your mortgage regardless of savings; then you get 5% interest on your savings.

Under the offset scheme, your mortgage and your savings are brought together: you pay 8% of what's left of your mortgage after you've deducted your savings. So your savings reduces the amount you have to pay 8% on (but you can't also get 5% interest on it!).

I expect you could switch back but there would probably be a fee.
 
You must log in or register to reply here.
Back
Top