Offset Mortgage & ISA's - Make a payment or keep ISA's?

Legacy_user

Hello,
I have an Offset Mortgage and a few ISA's which are offsetting against this mortgage. This is great as by offsetting these ISA's with the Mortgage I get a much better rate compared to receiving the standard interest on these ISA's.
However am not sure if I should use my ISA's to make a payment to reduce the mortgage or keep filling up new ISA's each year and continue to offset? (It would be nice to see my mortgage figure reducing).
If I do continue to offset the current and new ISA's, what should I do if the ISA interest rates go over my Mortgage interest rate? (would this happen?) And should I then remove the offset and receive the better ISA interest rate? Is this a good and only reason to keep the ISA's?
I just what to know what my options are from people with similar dilemmas and which one is the best?
Thanks!

evoke

Going off on a tangent, how did you manage to offset against an ISA? First Direct wouldn't entertain the idea as ISAs earn interest and they told me that you can only offset against accounts that don't earn any interest.

System

Hi Evoke... this is with Barclays and you can offset your Barclays cash ISA's.

PParka

Hi,

I do a similar thing. Normally Barlcays bring out a fairly good ISA once a year that has a bonus for 12 months. e.g. Tax Haven ISA, Golden ISA 1 and then Golden ISA 2.
I leave the ISA earning interest while the rate is higher than my offset mortgage. As soon as the ISA rate drops, I offset it (just one click online does the trick)
As the money is still in an ISA it keeps its Tax-free status.

Keeping the money offset in the ISA would have exactly the same affect as paying it off the mortgage.
You can choose between reducing the payments every month, or reducing the term of the mortgage.