Interest Rates and Off Set Mortgages

tonytsdiver

Britains interest rates may well drop significantly over the next year or so. Can anyone work out at what interest rate does it become better to withdraw an amount your using as an off set against your mortgage and instead invest it in a savings account ?

Example say 50 K is now used as an off set against a 50 k mortgage.Interest rates drop to say 3.25 %. Mortgage rate is .5 % above base so new mortgage rate will be 3.75 %.
As a basic rate tax payer will a savings rate of 7 % less tax beat the mortgage rate of 3.75 % ? Would you withdraw the 50 k and invest it in a 7 % savings account ?
Cheers Tony.

noh

If mortgage rates are 3.75% savings rates will not be 7%.


Nigel