Available funds from Abbey

tonytsdiver

With the possibility of a further base rate drop to 3.5 % this week I have a savings question regarding available funds in an Abbey Tracker Flexible Mortgage account.
If the rate drops this week, as above, the tracker is charged at .49% over base effectively giving an interest rate of 3.99 %.
So lets say you have available funds of 30 K currently offsetting that rate, would it be better for a standard tax payer to withdraw that amount and invest the money in a savings account,pay the mortgage and pocket the difference ? If so what would the minimum rate of savings have to be ? Thanks.

halight

Hi mate,
you might be best to go and see an IFA Or book to see somone at abby.
good luck

opinions4u

Mortgage rate 3.99%
Non taxpayer needs 4.00%
Basic rate taxpayer needs 5.00%
Higher rate taxpayer needs 6.67%

More likely
Mortgage rate 4.49%
Non-taxpayer needs 4.50%
Basic rate taxpayer needs 5.63%
Higher rate taxpayer needs 7.5%

Remember, you could use ISA allowances to maximise this situation. A couple could save £14,400 between now and 6th April tax free ... thus needing a lower return!

I'd be tempted to get a decent fixed rate right now to be honest!

This Bank of Scotland account gives you the chance to get 5.8% (4.64% net) fixed for a year with the option to get it out if mortgage rates turn unfavourably. Perhaps worth opening now and funding it after the MPC have made a decisaion!

http://www.bankofscotlandhalifax.co.uk/savings/BOSinstantaccesssavingsaccountreward.asp

Edit:
Just found this from Birmingham Midshires fixed at 6.4% (5.12% net) and allowing 4 withdrawals (no additional deposits though):

http://www.askbm.co.uk/savings/t/easy/product.asp?id=206

tonytsdiver

Thanks very much for your replies,much appreciated.