Advice on Offsetting Mortgage

Matblack

Good Morning

We currently have an IF Offsetting Mortgage which as you probably know is now closed to new applicants and no longer carries any deals as it is a legacy product.

We've always been happy with IF and offset our current accounts, savings and ISAs against a small mortgage. Recently we have come into some money, an amount which when added to our existing savings is in excess of our mortgage, giving us a positive of a few thousand pounds.

I have topped up the cash ISAs for this year and intend to keep the balance in an IF iSaver (high-ish interest account) until the ISA allowances open for 2010, at which point I will again top out the ISAs for the year leaving a small amount in the high interest account.

We have no plans for huge outgoings over the course of the next couple of years but there may be a reduction in income due to one of us not working.

My question is really, am I doing the right thing? Keeping the mortgage rather than paying it off? The IF mortgage is quite flexible and should we need money urgently I would be able to make a withdrawal against overpayments, but to do this the mortgage must be in existance rather than paid off so I feel it is prudent to keep the mortage despite having the full amount to pay it off. Most people would be worried about increasing interest rates but my thinking is that I am protected due to having the same or slightly more savings offset.

I'd appreciate some input and want others would do in the same sitaution

Many thanks

getmore4less

It costs nothing to have a 100% offset mortgage sitting there.

Handy instant access funds at reasonable rates.

The trick is to build up the excess savings to a point where you no longer need the funds.

Using the funds to live off is only a good idea if this will be recitfied in the future.

Matblack

Thank you,

That is pretty much what I had worked out, my plan is that we will not touch the ISAs at all and once we have added next years allowance we will only be a few thousand short of having enough in the ISAs to offset the mortgage. If we can keep our hands off the ISAs and fund all outgoings elsewhere then we'll be in a very strong position :j

Thanks again