Offset / Cheap Borrowing?

beckenham8

Hello,

I'm currently being charged 1.25% interest on my offset. I am in the fortunate position to have completely offset my mortgage due to parents/my own savings.

However being charged such a low interest rate has anyone looked into actually paying interest on the mortgage and moving the savings to a place where it will earn more interest?

With a 1.25% interest rate, I'm thinking I need to find an investment with a 1.57% interest rate to 'break even as such' (assuming basic rate tax payer)

Obviously I realise this can change as and when interest rates move.

Thanks,
B8.

getmore4less

yes,

Just look for places that pay more interest after TAX

Cash ISA are good place to start if not using the allowance, you also build up long term tax free pot.

Regular savings accounts often pay more.

There are plenty of term accounts paying more than 2% but if rates swing against you they could end up not saving any money.

http://www.moneysavingexpert.com/banking/
http://www.moneysavingexpert.com/savings/savings-accounts-best-interest#instant

Remember even with rates so low £25k in invetec currently would get you a margin of 1.92% so gross £480 in the year £384 net worth a couple of hours to set up.

beckenham8

Thanks for that, just wanted to run it by someone else to see if its worth doing. As you point out only a some amount of work. Now its just a case of if I should ring the bank up and ask if I can release more equity out of the house and thereby increase the cash to play with!

Joe_Bloggs

Routing £1000 a month through a Halifax Reward current account before transferring to an ISA or regular savings will earn £5 a month.
Putting the max £500 into a Halifax regular saver will get you £129 interest net at basic tax in a year.
J_B.