How to make money out of Barclays!

stiggy6767

Help needed please.
I am fortunate enough to have a fantastic offset mortgage from Barclays (was a Woolwich mortgage) with a reserve facility of £100K charged at only 0.59% above base. I have now reached a point where I feel comfortable using this cash to invest somehow. I have no ISA's or savings and I am prepared to tie the money up for a year or two maximum BUT whatever I invest in has to guarantee the capital back as a minimum as it will of course be borrowed. I am married, 3 children and a top rate taxpayer.
All suggestions gratefully accepted!

mr_fishbulb

You might be interested in a tracker bond which tracks at a certain level above BOE base rate. That way you if the base rate rises (and therefore your lone rate), your savings rate rises too.

The ones described here are certainty more than above 0.59 above base.

blinko

stiggy6767 wrote: »

Help needed please.
I am fortunate enough to have a fantastic offset mortgage from Barclays (was a Woolwich mortgage) with a reserve facility of £100K charged at only 0.59% above base. I have now reached a point where I feel comfortable using this cash to invest somehow. I have no ISA's or savings and I am prepared to tie the money up for a year or two maximum BUT whatever I invest in has to guarantee the capital back as a minimum as it will of course be borrowed. I am married, 3 children and a top rate taxpayer.
All suggestions gratefully accepted!

you will only want savings then so avoid stocks

use up ISA allowance first 3% best account out there

then as above a bond or savings account,

opinions4u

Mr Fishbulb has solved the problem.

A tracker savings product that pays more (after tax deduction) than your mortgage lender charges you.

An absolute guarantee for as long as the two products track.

(Although maxing out high paying cash ISAs may also be a good idea ... but I'd retain easy access because if savings rates don't follow the BofE rate up you could be exposed).

stiggy6767

Thanks folks
Will be looking at a mix of tracker bond and using up my ISA allowance, cheers.
Any idea what rates I would have to secure as a higher rate taxpayer to make margiin?

Jonbvn

stiggy6767 wrote: »

Thanks folks
Any idea what rates I would have to secure as a higher rate taxpayer to make margiin?

Since you are paying 1.09% on your mortgage, you have to get a gross rate of 1.81% (1.09/0.6) to break even.

Plenty of accounts paying 2.5%+. Have you looked at Lloyds Classic Vantage paying 4% AER on GBP5-7k and move 1k through them each month? You can open 3 accounts.

Have you considered putting money in your OH's name, assuming she is a basic rate taxpayer?

blinko

well i think you want to be looking at generating greater than 1% return which on 100k is £1000 otherwise it might not be worth your time and hassle, plus the risk if it goes wrong etc could far outweigh the rewards



but as above you need products taht will havea gross rate of 1.82% or above

xrjtg

opinions4u wrote: »

Mr Fishbulb has solved the problem.

A tracker savings product that pays more (after tax deduction) than your mortgage lender charges you.

An absolute guarantee for as long as the two products track.

(Although maxing out high paying cash ISAs may also be a good idea ... but I'd retain easy access because if savings rates don't follow the BofE rate up you could be exposed).

The guarantee isn't cast iron, as you have to cover the mortgage interest from post-tax savings interest. Break even is when the mortgage interest is 40% below the savings interest: if you use the Santander Tracker Bond rate of 3.25% then you'll make money as long as base rates stay below 2.65%.

Loughton_Monkey

I am in the same position, and was able to salt it away at 3.85%.

Being a higher rate taxpayer, you are not going to make a fortune out of this, but you may as well get what you can! Personally, I believe going much beyond a year fixed rate bond is dangerous. Base Rate could well go up in the next 12 months and leave you negative on the deal.

Seems to me that Santander's Tracker is 'heaven sent' for this purpose, since it will protect you from any BR increase. So 3.25% less 40% is 1.95%, leaving you 0.86% 'profit'.

If (as has been suggested) you could put the investment in OH's name (if Basic Rate Payer) then profit goes up to 1.51%. You say you have no savings, not even an ISA. If this means your OH pays no tax at all, then your 'profit' will be 2.16% (just fill in an R85 to get interest paid gross of tax).

Slightly off topic, but why not put exactly £96,852.30 into Santander bond? This will mature at £100K in 12 months. Use the other £3,147.70 to start an ISA. Pay the £1,090 Mortgage Interest out of income, and after a year (when mortgage is offset again), continue paying at least that into savings.

The only issue you have is that £100K in one bank in one name is potentially dangerous, since current guarantees are only up to £50K.

pfpf

hi OP.

i have the exact same mortgage and rate as you.

BARCLAYS OFFER ACCOUNT
(MORTGAGE CURRENT ACCOUNT)

Current Cleared Balance £0.00
Last Night's Balance £0.00
Overdraft Limit -£8,650.00

Reserve Amount n/a

any idea what the overdraft is and how its charged?

i am assuming the overdraft is what you would use if you used a cheque or the debit card attached to the account? but have no idea on the interest rate.

my reserve as you can see says n/a so i assume i dont have one?

thank you.

getmore4less

My rate is a little more than yours at +0.95% so 1.45%

Start with the barclays regular saver they revert to a lower rate but you re offset then.

Then use the barclays ISA, offset those when the rate drops below the mortgage after the year, this way you buil up ISA while offsetting.

Then I decided instant access at 2.5%+(tesco, egg) will do to unless I find better rates.

Stock and shares I use other spare money, unless you are happy to take a risk and increase the dependancy on future income I would keep the mortgge money in lower risk options.