Offset Mortgage linked to Savings Question?

thejoyces

Hi

We have a five year fixed mortgage linked to an offset savings account,with option to over pay interest only mortgage - my question is:

Is it better to pay off the mortgage loan amount or should we but the money into the offset savings account?

And if we put the money into the offset savings account - should we transfer this off the mortgage yearly/monthly or not at all?

Any comments/ideas would be greatly received.

Robert_Sterling

I would leave the money in the offset savings account.
It is then instantly available to you.
If you pay it off the mortgage it would be less instantaneously available.

silvercar

I agree, if its in the offset account it counts to reduce the mortgage interest, not much point in moving it to pay down the mortgage.

joepubli

...unless there is a risk you would spend it! If there is make it more dfficult to spend!

Fruitcake

I'm in a similar position. I have a part and part offset mortgage, part interest only and part repayment. I'm putting money in a linked savings pot which is offset against the mortgage amount. When I have enough to pay off the repayment part I will do so as I can also cancel the separate life insurance policiy payments that goes with it.

Yes, there is a temptation to spend the money if you are not disciplined enough, especially as some like mine give a huge reserve (overdraft) facility secured against your home. This is why an offset mortgage is not for everyone.

Just a general comment about using an offset mortgage. If you use your credit card, rather than cash or debit card, for everything and then pay it off in full, your money stays in the account for as long as possible where it is being used to offset interest. With the right card you can benefit from this and stoozing at the same time. I use this method and then move money from my main current/offset account into a separate but offset linked pot for every purchase. When the cc bill comes in, I always have enough in this savings pot to cover it.


Fruitcake

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