Offset Motgage - Quick Query

jackomdj

We have an offset & I always think of it this way:

Whatever your mortgage interest rate is, if you can place your money elsewhere & the net interest is more than your mortgage interest then you would be better off saving it elsewhere, otherwhise save it in your mortgage offset pot. We are fortunate as we have a 1/2% above BOE Base rate mortgage, but this means that we can put our money elsewhere & get a better interest rate.

Also don't forget that (depending on who it is with) current accounts etc can count against your offset, so if you keep a set minimum balance in your current account you may reduce the savings pot.

mark99

getmore4less wrote: »

So you then take £416 out of the offset(to ovoid going over 100%ffset) net cost from income zero.

or you just make the payment from the offset pot keeping the £415 and saving it so it is exactly the same as if you bought with cash

As I said before it makes no difference what the rate is because you have not borrowed any money.

But surely it DOES matter what the interest rate is, because in the case I mentioned I'm effectively pocketing £416 even though I am forced t use this to pay off the capital but this is better than investing £100K at 3% in a savings account and using the interest generated to paying off the loan (£250) which is the most I can get from a savings account!

Sorry to be a pedant but t seems I'm going to have to read a bit more until I get it!

Rgds

Mark

getmore4less

Why not get a mortgage at 10% so you pocket even more money !

What you are basicaly saying is everyone without a mortgage should get a mortgage and then 100% offset it and they will make money.

You are creating a false situation pretending to borrow at 5% when savings are at 3% but you are not actually borrowing any money.

There is no difference to buying outright or offsetting, you have no mortgage payment to make, you just use the same capital over a longer period(there is only an imanginary £412 payment all you actualy do is move money between two accounts(mortgage/offset) there is no external payment involved.

mark99

getmore4less wrote: »

Why not get a mortgage at 10% so you pocket even more money !

What you are basicaly saying is everyone without a mortgage should get a mortgage and then 100% offset it and they will make money.

You are creating a false situation pretending to borrow at 5% when savings are at 3% but you are not actually borrowing any money.

There is no difference to buying outright or offsetting, you have no mortgage payment to make, you just use the same capital over a longer period(there is only an imanginary £412 payment all you actualy do is move money between two accounts(mortgage/offset) there is no external payment involved.

Finally the penny drops - I get it, many thanks, Moreforless. :T

getmore4less

Great, Sorry it took so long to explain is a way that is understandable.

Does not stop it being a good idea to keep access to some money at relatively cheap rates if buying outright uses up all your savings.