Do Icesave calculate interest daily?

tinkerbell84

It's still early for me!!!

YorkshireBoy

Deleted_User wrote: »

Tut, no link...

Give a man a fish...;)

sloughflint

tinkerbell84 wrote: »

I knew it was higher than anything you could get on a savings account

Thanks!

If you can possibly be bothered to do this with £ 3000 for a year, this would work:
Drip feed an A&L regular saver ( opening a current account with them sadly) from a KE easy access account:

100/12*(5.5*0.0655+6.5*0.12)= 9.50% gross
This is the only RS that could work I believe as you would need >11.35% gross otherwise

100/6.5(0.0915*12-5.5*0.0655)

tinkerbell84

sloughflint wrote: »

If you can possibly be bothered to do this with £ 3000 for a year, this would work:
Drip feed an A&L regular saver ( opening a current account with them sadly) from a KE easy access account:

100/12*(5.5*0.0655+6.5*0.12)= 9.50%
This is the only RS that could work I believe as you would need >11.35% otherwise

100/6.5(0.0915*12-5.5*0.0655)

Thanks for your efforts on that. Long and the short of it is that I can't really be bothered - I'm trying to simplify my finances (already have 2 current accounts and various savings accounts) and having instant access to the money through offsetting, plus seeing the balance decrease more rapidly is the thing that works for me.

I'm a spender rather than a saver, so I want it to be as easy as possible to save the money rather than spending it

sloughflint

tinkerbell84 wrote: »

Thanks for your efforts on that. Long and the short of it is that I can't really be bothered - I'm trying to simplify my finances (already have 2 current accounts and various savings accounts) and having instant access to the money through offsetting, plus seeing the balance decrease more rapidly is the thing that works for me.

I'm a spender rather than a saver, so I want it to be as easy as possible to save the money rather than spending it

I don't blame you. A&L is a pain in the backside for having to satisfy the £500 external funding and now insisting on transferring a current account over. Not an easy option and for relatively little gain.Just wanted to give you the option.

YorkshireBoy

YorkshireBoy wrote: »

You're not comparing like-with-like.

You need to compare AER with APR.

Spookily, the post has just arrived and FD have sent me a flyer about their offset mortgage.

It seems the 5.49% may not be APR after all.

The flyer they've sent me is for their BOE + 0.79% product (so currently 5.79%) and they say the (overall cost for comparison) APR is 5.9%.

Assuming 5.79% is the gross p.a. rate, then that's roughly (5.79% / 12 0.4825% per month.

0.4825% compounds to 5.9% APR

So, applying the same logic to your FD mortgage of 5.49% gross...

That product has a quoted (total cost for comparision) APR of 5.7%. However, this figure is skewed by the £999 fee you've had to pay. The true APR, going forward and because you've already paid the fee, is 5.63% APR (5.49% is 0.4575% per month, which then compounds to 5.63% APR).

So, all that means you are comparing 6.10% AER (on the ISA) with 5.63% APR (on the mortgage).

In financial terms, that's a saving of £47 per £10K in the ISA...EVERY YEAR.

And look at the flexibility you retain...

* You may inherit in later life (so, even after settling any remaining mortgage, you will still have many years' ISA contributions protected from the taxman)
* Separate organisations for FSCS protection
* The opportunity to switch the ISA to a better provider...just look at the current 7.32% offering from NatWest for example

tinkerbell84

YB - thank you. I booked the fixed rate (10 year) offset mortgage in APRIL this year. I paid less than £600 in fees.

It's 5.49% for 10 years and I'll be offsetting around 40% from the word go. Should have the mortgage cleared in that 10 years.

I'm very busy this morning so didn't go through your whole post - I promise I will before I start moving money around.

sloughflint

tinkerbell84 wrote: »

I'm very busy this morning so didn't go through your whole post - I promise I will before I start moving money around.

You don't need to understand in great detail. YB has applied a formula to convert gross rate to APR if the 5.49% happened not to be the APR after all.
What he means is, even if the APR does turn out to be 5.63% rather than the 5.49%, it is still advantageous to keep your money in the ISA ( or even transfer to a better deal) than offset against your mortgage.

tinkerbell84

sloughflint wrote: »

You don't need to understand in great detail. YB has applied a formula to convert gross rate to APR if the 5.49% happened not to be the APR after all.
What he means is, even if the APR does turn out to be 5.63% rather than the 5.49%, it is still advantageous to keep your money in the ISA ( or even transfer to a better deal) than offset against your mortgage.

Thanks. The APR is definitely 5.49% for 10 years

And thanks you your advice, the OH and I will be leaving the ISAs alone

YorkshireBoy

tinkerbell84 wrote: »

The APR is definitely 5.49% for 10 years

I don't think it is, for the reasons I gave earlier. The 5.49% is a 'simple' interest rate...not an APR. I think interest is charged daily on the mortgage balance outstanding at 5.49%/365. It therefore can't be an APR because the rate charged isn't compounded at that point...and that's why the APR will be higher (around the 5.63% APR figure I mentioned earlier, and forgetting the fee that you paid for the deal).

Take a look through all your paperwork, from the KFI to the offer...and then take a look at their website...and nowhere will you see the letters 'APR' after the 5.49% interest rate.

the OH and I will be leaving the ISAs alone

I think that's very wise, but do keep an eye on the rates you're getting, especially since BOE rates could fall, and your mortgage rate is fixed. 2 base rate cuts (totalling 0.5%) could see you out of pocket...in the short term at least?