Offset mortgage - save or pay off?

dnkforums

Hi,

We have an offset mortgage with the Britannia and quite an amount in savings (> 30k), some of which is in ISAs and some in the offset account.

Is it better to retain this as mixture of fluid cash and offset or is it best to pay off a big chunk of the mortgage ?

thanks
DNK

JonnyBravo

Keep it offset for maximum flexibility. You dont really gain anything by paying off the mortgage unless youre worried youre about to spend it all on drugs and fast cars/women. Seeing as you've saved over £30k I guess that's unlikely!

dnkforums

hi,

thanks for that. What about ISA vs offset? Always better to go with the offset?

We have some variable ISAs and a 12 month fixed rate ISA that is due to expire later this year - these are ISAs that we've had running for years so there is quite a bit of money involved.

Would it be better to put the lot in the offset account, though?

thanks
DNK

Gorgeous_George

I'm with Britannia and had >£30K offset.

Currently ISAs pay more than my (tracker) mortgage rate and I like to use my cash-ISA allowance each year.

Recently, I transferred the bulk of the offset savings to a 1-year bond earning 4.3% gross which is 3x the mortgage rate even after basic rate tax is paid.

Essentyially, a post tax rate that is higher than your morgage rate is better than overpaying or saving in an offset. It's as simple as that.

GG

dimbo61

As george has already explained you want the best return for your savings and if this is in ISA,s or the offset account only you will know that.
What you need to consider is how much you still owe on the mortgage and how best to save after the mortgage is cleared ( hence the TAX free ISA,s )
Think long term not just about clearing the mortgage.
Isa,s savings will go up in october to £5100 each year.
GOOD LUCK