FLEXIBLE OFFSET - lump sum in2 savings pot or mortgage?????

bigcheese

have 90k to do something with on a 110k flexible offset mortgage , interest only, 15 years


can either put all in savings pot which will maintain current monthly payments with the positive differential interest also going into the savings pot (complete withdrawal flexibility)

OR

reduce the mortgage in one go which will slash the monthly payments (reduced withdrawal flexibility)

OR

go 50/50

cant get my head round what happens if interest rates double or treble

answers on a postcard please !!

hillcats

I guess you should use this money wisely as you only have an interest only mortgage, and clear a massive junk off your capital, interest repayments on the remainder will of course be a lot smaller, then you can work on clearing your outstanding capital.

dimbo61

I am guessing that you have not saved this £90K lump sum and someone nice has left it to you ?
If you paid off say £74K and keep back £16K as an emergency fund in the offset account and at the same time asked your lender to keep your mortgage payment static ( ie whatever you are paying right now) you wont notice any difference in your monthly outgoings and you will have a nice savings pot( which is saving you interest) which along with the overpayments you are now making each month will soon have the mortgage cleared.

getmore4less

It makes no difference to the cost of the mortgage it is based on net borrowings.

So unless you have reasons not to have access to the money, offset it so you can get it back if you want.

The change/difference in mortgage payment is irrelivent

OverlandLandy

Perhaps pay part of it off and switch to a repayment mortgage?

Set the payments at around the same figure as the IO - so you will see no more money going out of your account, however you can see the amount outstanding reduce each month...