Savings v Offset Mortgage

childed

Hi, looking for advice on managing offset mortgages....

I've got a flexible lifetime tracker with Abbey set @ 0.49% above BOE base rate, so after today will be on rate of 0.99% :-)

Mortgage outstanding is c£90k and I've got £30k savings offset against this; I still pay interest on whole amount, but overpayments (ie interest on £30k) are added to savings.

This made sense when mortgage rate was 6% but now I'm thinking I would be better off putting savings somwhere that give a better rate of return

Any advice would be much appreciated!

dizzie

We're in a similar position, and yes you should be able to get a much better return elsewhere.

I don't know how long the interest rates will stay so low, and we might need medium term access to some of our savings, so for us, I've decided not to go for long fixed rate bonds. But I have been looking at various ideas e.g. opening an Egg account (think it's 3.35% at the moment but will probably drop by the 0.5% cut in BEBR shortly), and then opening some fixed rate regular savings accounts and drip feeding into these (from the Egg account) for a year to maximise return. Even if Egg drop it's rate to say 2.85% gross, after tax you'd still get 2.28% return as a basic rate taxpayer (or 1.71% if paying tax at the higher rate), and that's before you start drip feeding it into a regular saver to earn a bit more.

billy_Bremner

I am about to be made redundant, however I am fortunate enough to have about £30K and wanted some good advise on how best to make this money work for me.
I have an outstanding mortgage of 38K, (8 years left on this) does anybody think that an offset mortgage would be the best way to use the 30K. Any good advice would be greatly appreciated

Robert_Sterling_3

There is quite a lot you are not telling us.

dimbo61

Hi billy if you are about to be made redundant then you are expected to live off the redundancy money for some time !! and paying it off the mortgage is therefore not a good idea.
Have you got an offset mortgage already ?
If you can move to an offset mortgage with no fees then you will pay much less interest ( consider an interest only mortgage )

billy_Bremner

Why has Robert_Sterling posted that...what do you mean there is quite a lot I am not telling you????
......."Liar & Idiot & Cretin" (Posted by Mr E Man )
................"Opinionated Ignoramus" ( Posted by Scarboroughdd )