If you can pay off an offset should you?

majors01

My savings in an offset account are equal to the total owing on my mortgage. So I pay no interest at all, neither do I receive any. My mortgage outgoings monthly are about £450 towards the capital sum, (it varies slightly each month). Should I pay off the mortgage in full by using the savings and then aim to save £450 per month? This would have the advantage that I would start to earn interest. But it has the disadvantage that I am unlikely ever to get a mortgage again because of my age.

Burridge60

difficult

If you have other credit then no!

if you want to be debt free then yes

if you want access to a ready sum of cash which is effectively cheap borrowing then no

I would struggle along dormie offset to steal a golf phrase.

Do your big Cash ISA for this year and your slightly bigger one for next year and if you are very decadent the Share ISA allowance too.

Let's be cheeky buy your mortgage lenders shares!

I bet it works out works out better.. But then it is a bet!

joepubli

see no point in repaying it. This way you have flexibility.

You could try and covert the mortgage to an interest only if you are trying to avoid paying the monthly capital.

getmore4less

You should be saving £450pm now.
Pay the mortgage out of the offset savings soth ey stay in ballance.

What rate is your mortgage?

Mine is 1.45% so I am moving the offset money into savings accounts where it earns more(most do with a one year bonus then you have to find another one, could not have done that if I had paid it off.

With my offset(costing nothing) I have access to a lot of money for 11.5years at base+0.95% I am not giving that up Just in case I need it.

Are you in your final house. keep the mortgage if you plan to move again.

Might be a lot easier to move if you can just throw some cash at it from the offset pot and sell your current one a bit later if timing ios not quite right for completions.

InMyDreams

majors01 wrote: »

My savings in an offset account are equal to the total owing on my mortgage. So I pay no interest at all, neither do I receive any. My mortgage outgoings monthly are about £450 towards the capital sum, (it varies slightly each month). Should I pay off the mortgage in full by using the savings and then aim to save £450 per month? This would have the advantage that I would start to earn interest. But it has the disadvantage that I am unlikely ever to get a mortgage again because of my age.

I'm not sure I follow your advantage.

If currently savings = mortgage balance, then when you pay your £450 and therefore reduce the mortgage balance by £450, then presumably your savings now exceed your mortgage balance by that same £450. So you can take that £450 back out of your offset savings pot and stick it in an account paying interest instead.

In other words, your so called 'advantage' is the same whether you pay off the mortgage or not.