Offsetting queries

polgara

My OH and I were considering a fixed mortgage (2 yr fixed, 25 year mortgage) - potentially was looking at Nationwide but now are erring more towards offsetting. We've got 10,000 in my cash ISA and 3,000 in OH's and potentially another 10,000 spare cash (if my car sells soon) that could be offset. We're currently planning to overpay the remortgage by about £300-£500 given our current situation and are hoping to clear it within 10 years or sooner.

Ideally I'd like to keep the ISA wrappers so could transfer it out once the mortgage is repaid. Are they any offset mortgages that offer this? Do other MSErs think this is wise or should we consider a different option

louisdog

Can't comment on your situation and what'd be best for you but just to let you know that we have an IF offset, partly because it allowed us to keep our cash ISAs and offset them against the debt. There were one or two other companies that did this but most did not. We are really happy with IF.

HTH

lisyloo

IF are dire IME (and high rates).
Woolwich will allow you to offset ISAs.

But why offset ISAs if you can get a higher rate by not offsetting.
My new mortgage will be 5.99% but my ISA is 6.25% so it's better to NOT offset in that scenario.

Woolwich are a good one to look at if you want to offset ISAs, but don't be blinded by this feature (which might not even be useful).

Also have a look at First Direct.
They have a reputation for very good service (woolwich don't unfortunately).
FD do not allow ISA offsetting, but otherwise have a lot going for them - good rates and very flexible.

I looked at rates recently and virgin and IF were a lot more than woolwich and FD.

KiKi

I offset with the Abbey; as others have said, my mortgage rate is 5.49% and my ISA is 6.7%, so I keep my ISA separate.

I personally love the Abbey one because the offset savings pot acts as a tax free savings account.

Rather than *not* paying interest on the £10,000 of your mortgage (if you have £10K in savings), you pay the interest, but then they *credit* the interest you shouldn't have paid to your savings pot.

The overall effect is exactly the same, but where most offset mortgages just take that 'interest difference' off the mortgage, the Abbey one credits it to your account. This suits me fine because although I do want to pay my mortgage off, I'd prefer to collect the interest, tax-free, in savings for the future, in case I decide I don't want to pay my mortgage off after all!

The other benefit of the Abbey one is that it's a flexible mortgage, so you can overpay into the savings pot, and get even more tax-free interest back! You can access the savings at any point, obviously.

HTH

KiKi