Barclays Offset mortgage customers – TAKE HEED!

I'm not an expert on terms and conditions for such a facility; but I am sure there will be something about 'market conditions' may reduce or close the offset facility.
Abbey National made the same promise but shut down or used offset savings to reduce LTV on the mortgage loans; this cause enormous financial distress.
Som couldn't pay tax bills as the money was used to pay own or reduce the LTV.
Try and obtain a FULL set of conditions and read EVERY line and understand it before you take out the product.
Or rather take out the product.
Read every line and if confident then put the the spare borrowings back into the offset facility.
Personally I wouldn't trust them.
But that is something only you can decide; which should be brought about by you carrying out full DD, ideally before you purchase the product!

What an interesting thread - especially for me as a mortgage broker! So, before I commented on this subject, I thought I would check out some facts directly with the people I know in the Woolwich.

And for clarity, for those who may not know the banks terminology, the RESERVE account is DIFFERENT from the linked current account.

The reserve facility account is being affected, the linked offset account is not.

They have said;

"Yes, Offsetting will still happen regardless as to whether or not a borrower has a mortgage reserve.

If a borrower has a mortgage of £100K & there is £100K in a linked current account or savings account then they will receive interest benefit either by the way of term reduction or payment reduction for the full mortgage amount.

The reserve facility is flexible drawdown funds that some Offset & non-Offset borrowers have access to. We haven’t allowed new reserves for some time."

In essence, for clarity, there is a DIFFERENCE between an offset mortgage WITH a reserve facility and an offset mortgage WITHOUT a reserve facility.

So, if you have an offset mortgage and you offset your savings / linked account monies, but you do NOT also have a reserve facility, then all's well.

If you DO have a reserve facility arranged, then this is the type of Woolwich offset that may be affected.

I hope that offers some help to those who remain confused - which to be honest is so easy to become in today's mortgage minefield.

Use a Broker 😉

Hi
I have an openplan mortgage with mortgage current account reserve limit of £110k which is used occasionally,never to the limit.
Am I likely to lose this facility?How is openplan different to offset?

Former proprietor of Independent Mortgage Brokers.

I have the Woolwich OpenPlan, not the Offset: mine does not offer different 'pots', just a low variable rate - but most importantly for me, it gives me a large credit facility (referred to as the Reserve) against my house, which I access with a cheque-book or via ATMs. This has been invaluable to me as a source of BTL deposits.

I went into Barclays last week and was served, quite fortuitously, by a former Woolwich mortgage adviser, who remembered me. I got chatting with her and the Branch Manager and raised the concerns addressed by this post. They would comment only unofficially (and with furtive sideways glances à la 'Allo 'Allo); they had heard that unused reserves were to be rescinded by (I think) 20th May.

I asked whether I should write myself a very large cheque - they both nodded vigorously.

Make of that what you will.... I'm not one of life's Conspiracy Theorists, but I'm grabbing the money while it's there; if I'm proved wrong, it's cost me a little interest.

Hi Baz

It does seem that the 'Reserve' is the key thing here .. irrespective of whether it's linked to an offset, openplan or otherwise.

Certainly our own Woolwich BDM has inferred that reserve accounts are no longer available, but offsetting accounts still remain 'as is'.

I strongly recommend that any potentially affected borrower speaks with their bank and ALSO a whole of market Adviser for a balanced insight into their options.

Howard

Having also spoken to Barclays direct on this issue, I think Baz's post of yesterday is correct. I have an 'offset' mortgage with a 'reserve' and was advised that I could transfer this 'reserve' into one of my 'offset pots/jars' where it would still be offset against my mortgage, thereby costing me no more than I am already paying, and it would be available then for whatever purpose I choose (BTL deposit etc). The Barclays representatvive was not aware of any plans for my account, but reading between the lines of what he said, he knew something was coming.

Very interesting read. I have just transferred my reserve overdraft amount to another savings pot in my Barclay's account.

I spoke to a Barclays advisor about a week ago with a general enquiry and in the course of the conversation he explained that the overdraft reserve facility on an offset mortgage would be capped 'at whatever level you're currently using' from 19th May. This worried me somewhat so I rang again later and after a lot of to-ing and fro-ing finally had a supervisor tell me that only customers who had received a letter (suposedly sent with 60 days notice) would be affected. I said I hadn't received a letter and he said he couldn't see anything on my account to suggest I was one of those customers and that therefore my account would continue as normal with the overdraft reserve increasing as I paid off the mortgage.

Irrespective of their assurances I've now transferred the maximum I can from my overdraft reserve to one of my savings pots.

Forget the savings pot; ever heard of offset.
I would transfer the savings to an institution nothing to do with Barclays.
you cannot be too careful with banks.....................don't trust them!

Interesting development.

The changes were implemented last week-end and I made sure that the available funds were moved out.

I did a transfer on Sunday based on available balance and left a bit in the account to keep it in credit.

Went to buy a sandwich on Monday and card was refused. On checking my overdraft limit had been reduced late Sunday and a direct debit was also refused.

Got home Monday and checked again and my overdraft limit had been reduced late Sunday. Also a direct debit had been refused.

Checked again Tuesday early and the limit had been raised overnight to its previous limit so neither the DD nor my lunch should have been refused.

Thursday letter from bank telling me they are charging for refusing the DD.

As an aside there is enough sitting in the "pots" to pay the mortgage for about 18 months.

I'm going to speak the bank tomorrow and unless they agree to refund the charge the account will become a simple feeder for mortgage, standing orders etc. and the fairly substantial amounts which flow through on a regular basis will be held elsewhere.