First Direct offset mortgage question

paulb369uk

Hi all,
Just after a bit of advice on what is best to do?? Is it better to pay extra off my mortgage or just build up funds in my offset account ?? Not talking massive amounts only about 7k, mortgage is 120k.

Many thanks

Paul

lisyloo

Mathematically there is no difference.

I believe it might be treated differently if you came to claim mean tested benefits.

Have you considered a cash ISA?
A cash ISA may pay a higher rate plus is tax free for LIFE (under current rules) so will still be a tax haven once your mortgage ends.

Are you also paying enough into a pension?

gil13

I think it will be marginally better to make a payment of capital over offset, whenever I used to use FD's calculator and put say 5k less for the mortgage amount vs 5k offset, then the montly payments would always be less if you paid capital. I suspect this is something to do with the interest over a 20/25 year period but could be wrong.

straddie

With FD you can borrow back any capital you repay so in terms of access to your money there's really no difference between offsetting it in savings or paying it off as capital.

paulb369uk

straddie wrote: »

With FD you can borrow back any capital you repay so in terms of access to your money there's really no difference between offsetting it in savings or paying it off as capital.

Thanks for replies guys much appreciated

Paul