Take more mortgage and save it?

Kavanne

So, on my mortgage I have an £11000 'cash reserve' available. this is funds I was assessed as eligible for when I took my mortgage (ie: I borrowed 70000 but they said I could have up to 80000). I can have this money within 3 working days from request.

My question is. Should I draw on this 'cash reserve' and put it into my new Halifax Guaranteed Saver Reward which is at 6%? My current mortgage rate is 3.75%.

I can't see any disadvantages, tbh. Is it illegal to take extra money from my mortgage just to save it?

Also, the Hfax reward account allows 4 withdrawals so if rates went back up, I could just put the money straight back....

Am I missing something? When I have 'bright ideas' I always worry about them!!

(I believe this would increase my mortgage repayments but I can cope with that i think) I am already overpaying (installments are the same as when the rate was 6% on my mortgage)

Any help is appreciated.

gozomark

is it illegal - no

what is your marginal tax rate ?
is there an arrangement fee for borrowing the £ 11k ?
would you need to have your property revalued to allow you to borrow the extra ?
is there a minimum period you have to borrow it for ?

Kavanne

gozomark wrote: »

is it illegal - no

what is your marginal tax rate ? Basic rate taxpayer - 20%
is there an arrangement fee for borrowing the £ 11k ? No, I just need to ask for it
would you need to have your property revalued to allow you to borrow the extra ? No, my LTV was really low so even in the current climate my house would definitely be worth more than my mortgage
is there a minimum period you have to borrow it for ? This doesn't matter as I have offset activated so I could just pay it into my offset account if I couldn't pay it directly into the mortgage

But for 6% I would come out.... about £116 on top after the tax on my savings ( 6% gross = 4.8% net)

gozomark

seems sensible then :beer:

StrawberryJam_2

you would get a better response in mortgage section to be honest. http://forums.moneysavingexpert.com/showthread.html?t=1290511
I have often thought about doing this too, so will monitor this post closely.

I could be looking at 10k from my mortgage (currently sitting 3.24%) and simply put it into a esaver with A&L that nets 4.65%. While keeping my mortgage term the same, and allowing my monthly payment to increase/

is it as simple saying I will be £141 better off in the year (assuming rates stay same?) (10000 * 0.0141 = £141)

Kavanne

I found the catch!!

Any money drawndown from my cash reserve is at Standard Life's SVR not my normal mortgage rate So instead of 3.75% it would be at 6.59% (at the moment anyway)