Offset vs ISA

The_Architrave

I'd really appreciate it if one of the experts here could validate my logic.

We currently have an £80k offset tracker mortgage with Egg at 0.75% above base, so currently 5.25%.

In the offset account there is £25k. Of that, £12k is from 0% credit cards, expiring in April and November next year, so we should keep that money available. But is there any reason why my wife and I shouldn't put £3,600 each of the remainder into a fixed rate ISA at 6.25%?

The only downside is if the base rate goes up by more than 1%, which I don't think is likely.

Thanks in advance,

William.

lisyloo

It's very sensible to use ISAs.
Potentially they are tax free for a lot longer than offsetting (subject to the government conitnuing with the ISA rules).

The other reason is the higher return.
As you say base rates may change but generally you can find higher rate ISAs than mortgages.
You need to keep our eye on rates, so that's the only disadvantage.

The_Architrave

Thanks for that lisyloo.

Now I need to track down the best ISA. Fixed rather than variable. The Principality seems to be the obvious choice, unless anyone knows of a better rate?

Actually, I should probably ask that in a different forum.