Barclays Offset mortgage customers – TAKE HEED!

Here's an example of my understanding of how it works.

Let's suppose that a facility of £200,000 was agreed.

Your currently have £100,000 in your reserve account so you are only paying interest on £100,000 of your mortgage.

The status quo will be frozen at that level of mortgage, i.e. going forward, your facility will become £100,000. Therefore, once the change has occurred you will not be able to draw the £100,000 from your reserve account as it will not exist. You will simply continue to pay interest on your £100,000 mortgage, hence the advice of many people to take your cash out of your reserve facility now and deposit it with another bank if you think you might need it at some point.

I was a Standard Life customer and got transferred to the Woolwich Offset product. The transfer was not seamless and Woolwich misplaced my offset for several worrying days. At the time I was convinced that Woolwich had used the offset funds to settle the majority of the mortgage but in the end this money was transferred to my Barclays savings pot and along with my Barclays current account is used as an offset against the mortgage amount.I have just spoken to a mortgage supervisor at Woolwich and they have confirmed that any money within the savings pot and current account will not be utilised to settle the mortgage. They have agreed to confirm this in writing. The supervisor also confirmed that any prearranged mortgage current account drawdown facility from overpayments would be stopped, although this is zero since the transfer from Standard life. I would advise that anybody wishing to use their mortgage current account draw down facility money, deposit this within their savings pot / current account and it will still be utilised toward the offset of the mortgage.

1) Have not received any letter myself and I do have one of these accounts, although will now check recent correspondence which I may have thought was just the statement, but the article suggested these had not yet been issued...

2) Don't assume the new limit will be frozen, my experience with cahoot was that as it was repaid, the facility was progressively removed (without notice, I was just informed after I had paid quite a large sum)

3) It only applies to mortgage payments, other money going in cannot be used to reduce the debt. See your reserve limit and subtract the overdraft used for the amount of reserve you now have.

Hi,
I have a reserve of £79000 and have recently been made redundant. I was counting on this reserve to get us going for a few years until I get my pension. Your contributor's comments worried me so much and had a sleepless night!
Anyway, I called them (Barclays/Woolwich) and asked them if it was true that they were changing their terms and conditions on reserves. They asked me if I had received a letter about this. I said no. They said they are only changing the terms and conditions for some mortgagees, NOT ALL.
I think the best way of knowing whether you are affected or not is to check your monthly statement. My April statement still indicates the available reserve.
So, the morale of the story is that for most of us the reserve is still available. Only those who have been contacted directly are losing the facility (presumably for using it already!).
I'm not a lawyer, but there must be a way of stopping the lender changing such a feature of the mortgage unilaterally. Aren't Terms and Conditions binding on both sides?

@Sina - you have seen what can happen. If I were you I would have already taken the money out and put it on deposit elsewhere. Your money, your future, your choice!

Thanks Mark for suggesting to withdraw the reserve and keeping it somewhere else. But where?
Can anyone suggest a decent rate deposit account where the net interest after tax is at least equal to %1.25?
I have been thinking about it, even before these recent postings, but finding an alternative temporary home for the withdrawn money is difficult.
Any suggestions would be gratefully received.

Santander 123 current account 3% with savings from £3000-20000

All, are we possibly getting confused between the Open Plan product and an Offset product, as per the Times article by David Budworth, which clearly states "Open Plan" and does not mention "Offset"????

I'm not sure it matters what the product is; if you have ANY savings in ANY institution where you any sort of loan product; even a credit card, you should remove the savings or utilise the offset facility to it's maximum.
Yes there will be a cost for not being able to offset such savings against debt; but it is far better to retain access to a facility even if it might cost you an extra percentage.
Being able to access liquidity is what is important here.
Of course if this does not concern you then just leave the monies where they are, where they will be used most probably to reduce your debts with the offending bank etc. and if not they will continue to offset at maximum advantage.
All depends what you see as your priority.
However unless you have a crystal ball which works I cannot see why you would risk losing your savings to reduce debt.
Once it is paid down you will never be able to borrow back.
You could easily find yourself redundant with insufficient income to pay the mortgage whereas you could of used the drawdown funds to keep the mortgage payments going until you found another job.
Paying down debt is generally NOT a good idea if you think you might need liquidity

I hear you Paul, but I have had a converstion today with Barclays as I am thinking about applying for an Offset and I questioned the rumours that access to the savings element could be restricted and they said it was complete rubbish!

They said I will always have access to whatever is available in the savings account and as the savings go up and down so does the interest I pay on the mortgage. They said there is no point in having more in the savings account than the outsanding balance in the mortgage as if you get a better return in a standard savings account for the difference. I am looking at borrowing £400k of which £200k will be immediately deposited in the savings account, so therefore initially i will only pay interest on £200k until I start using the savings and Barclays confirmed that my access to the £200k in the savings account will never be restricted!!!