Mortgage free (Technically)

Fruitcake

My wife and I have chipped away at our mortgage for over twenty years. We have changed lenders twice and paid off chunks when various investment and endowment policies matured.

It has not been easy but we are old school so went without rather than go into more debt. It has finally paid off partly because of this, partly due to luck, and partly due to this fantastic site.

We changed to an offset mortgage several years ago and as of yesterday we owed ₤3849.05.

Today we paid ₤3850.00 into a savings pot from another endowment policy thus offsetting what we owe. From now on we only pay off capital and pay no interest.
We chose not to become literally mortgage free as the overall package comes with many benefits that we would lose if we paid it off in full. We are in the process of setting up a Cash ISA that will also be offset linked to the mortgage, and we will transfer the maximum funds allowable into that as soon as possible.


It has been a long hard slog, but worth it in the end.
Today is a day of celebration at Fruitcake Follies.

maz123_2

Well done, I can but dream of the day myself enjoy the celebrations!:beer:

MoneyQueen

Hi Fruitcake,

Well Done and Congratulations _party_

StuartGMC

Fruitcake
Well done, we similarly moved to offset in 2006; we're hopefully on target to hit 100% offset in the summer, presently 88.1% offset against (as of today!) £18k remaining and in October we'll clear the mortgage, having built a small reserve cash fund. Thereafter we'll max out Cash and S&S ISAs etc.

I have one question for you; if you already offset to 100% from the savings pot, why tie in a Cash ISA which will mean you are in excess of this amount, and will it still earn interest (tax-free) whilst you get zero on the offset pot? Just interested but also concerned that you get the best Cash ISA deal you can now.

Well done on the hard work that has got you here

Fruitcake

StuartGMC wrote: »

Fruitcake
Well done, we similarly moved to offset in 2006; we're hopefully on target to hit 100% offset in the summer, presently 88.1% offset against (as of today!) £18k remaining and in October we'll clear the mortgage, having built a small reserve cash fund. Thereafter we'll max out Cash and S&S ISAs etc.

I have one question for you; if you already offset to 100% from the savings pot, why tie in a Cash ISA which will mean you are in excess of this amount, and will it still earn interest (tax-free) whilst you get zero on the offset pot? Just interested but also concerned that you get the best Cash ISA deal you can now.

Well done on the hard work that has got you here

I need to double check, but my understanding is that the Cash ISA will still earn some interest whilst offsetting the mortgage, so we will just move the money from one pot to another. If this is not the case, the interest saved on the mortgage will still be more than the interest gained from the ISA. We won't have more money in the account that we can offset so will pour the maximum into other savings schemes.

As I said, still need to do a few sums to make sure we are gaining the most from this situation.

One question for you. Do you pay for things by using debit card/cash/cheque? We use our credit cards so that the money stays in the account longer and therefore offsets a greater amount for longer. This only works if you pay the cc bill off in full each month. We also maximise stoozing from this as well.

dimbo61

Any cash ISA,s put into the offset account will not earn any TAX free interest so you may be better off in the long term keeping the ISA,s seperate and building up your savings in ISA,s for long term savings that are tax free.
If you can fill both ? your ISA,s before the 4 april 2009 and start new ISA,s after the 5 april some very good deals IE First Direct offsering 7% regular ISA saver TAX free.
You could even use some of the money in the offset account and carry on paying the mortgage for a little while longer. GOOD LUCK ON THE MF !

getmore4less

dimbo61 wrote: »

Any cash ISA,s put into the offset account will not earn any TAX free interest so you may be better off in the long term keeping the ISA,s seperate and building up your savings in ISA,s for long term savings that are tax free.
If you can fill both ? your ISA,s before the 4 april 2009 and start new ISA,s after the 5 april some very good deals IE First Direct offsering 7% regular ISA saver TAX free.
You could even use some of the money in the offset account and carry on paying the mortgage for a little while longer. GOOD LUCK ON THE MF !

Temporary offset of ISAs is not an issue you just un offset them when you have the funds to replace them and still keeep the long term benifits

How this is done depends on the lender and how they handle ISAs in the offset.

The usual applies if you can better the mortgage rate with an ISA do it rather than offset in the ISA.

baffcat

Fruitcake wrote: »

One question for you. Do you pay for things by using debit card/cash/cheque? We use our credit cards so that the money stays in the account longer and therefore offsets a greater amount for longer. This only works if you pay the cc bill off in full each month. We also maximise stoozing from this as well.

That's exactly what we do. We use the Tesco C/C for an ything we can, as the points gained spending on it pay for a lot of meals out, hotel rooms, theatre tickets & other little treats.

StuartGMC

Fruitcake wrote: »

One question for you. Do you pay for things by using debit card/cash/cheque? We use our credit cards so that the money stays in the account longer and therefore offsets a greater amount for longer. This only works if you pay the cc bill off in full each month. We also maximise stoozing from this as well.

Yes, we've done exactly that since offsetting; took a bit a time to be comfortable using a credit card for food though! With faster pyments and using same bank for cc and current a/c, the funds transfer that very day, but for safety I set it to pay about 3 working days in advance.

setmefree2