Abbey offset/flexible tracker mortgage savings....

sloaner555

Hi, Just wondering if any of you have an Abbey Offset/flexible tracker mortgage.
I have a sizeable amount in my savings pot and im considering paying it off against the capital. I spoke to Abbey this morning and they advise me to keep the money in the savings pot as it earns more interest. Surely its better to lower the capital - especially when the interest rate is due to go up again next year.... Are Abbey giving me bad advise here? Are they trying to make more money out of me?

Any advise/comments will be gratefully received.

Thanks

supersunshine

What interest rate are you paying on your mortgage and what interest rate are you getting on your savings?

goosander

If it is the Flexible Plus Tracker mortgage you are talking about, there will be no difference in terms of interest saved between leaving the money in the savings pot or paying off capital. Leaving the money in the savings pot is best as it means the money is readily accessable, if you pay off capital and later want the money back you may find Abbey won't oblige especially if you are high LTV or if your mortage has a very good interest rate (i.e. they may want rid of you).

jill2002

The only difference will be the monthly payment that you make.

At the moment, whilst your savings are in the savings pot, you are paying the monthly amount to your mortgage for the amount outstanding. The amount over which is necessary (because you have money in the savings pot) will be also put in the savings pot, therefore increasing the savings.

If you choose to use the savings to make a capital repayment, then the monthly amount repayable will reduce - as your outstanding balance will be lower.

Sorry if it sounds complicated - it's not really.

sloaner555

thanks for all the replies - we are currently paying 0.99% (long it continue).
I was just concerned that if we dont lock the money in the capital now, then it we would loose out in the long term, but it sounds as if we should just keep it in the savings pot.