Thanks for reply. That helps to clarify issue around fixed rate. Can I ask if you can explain the offsetting function of these mortgages. We were so young when we took the original mortgage out with First Active. Our balance is not reducing to what we feel it should be and our MABs advisor assumes there may be money in another account i.e the offsetting?? Thank you
The mortgages were set up with an attached current/facility account? Have you ever or do you use the current account for anything? The idea being that you would have salary paid into the current account and use it as a fully functioning C/A for direct debits, debit card etc etc. The benefit being that every night there was a balance in your current account then you would not pay interest on the equivalent amount of your mortgage.
So for example you owe 100,000 and you are paid 2,000 on the 1st of every month, therefore night one 1st of month the 2k goes into current account and that night you are only charged interest on 98,000, 2nd of month a bunch of direct debits go through and you only have 1,000 left in current account so second night you are charged interest ont on 99,000 and so on throughout the month and the interest owed is then charged to your mortgage once a month. Equally if you have more than just your salary in the current account you save interest on that too so say you win 5k on lotto and you stick that in there then while it's there you don't pay interest on 5k of your mortgage.
This does not affect your monthly repayments usually which stay the same other than for interest rate changes, what it will affect is the term of the mortgage as the less interest you pay the more is coming off the capital so the mortgage gets cleared earlier.
There can also be savings accounts attached to the mortgage where the amount in them is offset against the interest however it doesn't sound like you are operating any extra accounts other than perhaps the current account.
I don't think your MABS advisor understands it either (I was one of them for a while too) and it's unlikely there is money sitting in another account that you don't know you have, did you ever put money into a savings account with FA/UB them and forget about it? Either way it wouldn't affect the balance owing it would just affect the interest charged.
If you have never really used the offsetting benefit as in used the current account with credit balances or any attached savings accounts then the mortgage really just behaves like an ordinary mortgage and if you have paid all repayments on time the balance should on schedule to pay off as per original loan offer. Usually when statements come out it shows any interest savings due to offsetting and also the amount of time saved off the term.
Any other questions just ask!