Offset Mortgage against CASH ISA?

RenovationMan

wapit wrote: »

Hi All,

Thought I would resurrect this one again.

Anyone know of other offset mortgage lenders who NOW allow cash ISA savings to be used to offset against their Offset mortgages?

It still seems only to be Barclay's that I can find.

I want to start to shift my offset savings into ISA savings so when I eventually achieve 100% offset I can enjoy the lifetime tax free benefits of the cash ISA.

Do you anticipate investing more than the ISA maximum per year once your mortgage is fully offset?

wapit

Um yep, but I am still around 4-5 years away from that milestone.

Why do you ask?

RenovationMan

wapit wrote: »

Um yep, but I am still around 4-5 years away from that milestone.

Why do you ask?

Just making sure that it's worth limiting yourself to the small number of lenders who are prepared to link ISAs to Offsets. If you were going to invest less than the ISA max amount (once your mortgage is fully offset), then you might as well just start your ISA savings at that point as you would have nothing to gain from doing it earlier.

Conrad

Personally I seek best performing ISA and lenders with lowest long term rate expectations - for example Building Societies perhaps.
I would not lightly compromise these imperatives simply in order to find a one stop offsetting option. How is you ISA money invested, by whom, what is thier cut?

wapit

Thanks, that makes sense.

I would have thought this was quite a common thing for people with offset mortgages (with a reasonable lump sum in) to want to do.

OK it makes no real difference if its a general savings account or an ISA account as the offset mortgage product I assume treats it all the same i.e. no interest is paid out on the savings.

But the longer term benefit is clear at least to me as you can then shift the ISA's out of the offset mortgage whilst maintaining the tax free wrapper gained from it being a cash ISA account and start to earn interest on it hopefully for a much long time.

With ISA's it all about the "use it" or "lose it" , so far I have been "lose'in it"

By my calculations with my current mortgage rate I would need to find a cash ISA earning more than 8% to make it worthwhile.

So it seems that Barclay's are the only ones? and they seem to have large fees for their Offset mortgage products, hmm I wonder why.

Thrugelmir

wapit wrote: »

By my calculations with my current mortgage rate I would need to find a cash ISA earning more than 8% to make it worthwhile.

8% ? :eek:

What's your mortgage interest rate.

getmore4less

Conrad wrote: »

Personally I seek best performing ISA and lenders with lowest long term rate expectations - for example Building Societies perhaps.
I would not lightly compromise these imperatives simply in order to find a one stop offsetting option. How is you ISA money invested, by whom, what is thier cut?

offset == cash ISA so it does not matter.

No one I know offsets S&S ISA.

nexus7

I am in a similar situation, whereby I have an offset and £50k in cash isas.

The ISA rate currently beats my offset mortgage rate but if that changed e.g. base rate goes up I'd just move the isas into the offset.

As I approach the point where cash savings = outstanding amount, i'd syphon money off rather than end the mortgage and then slowly transfer funds back into more efficient savings again.

That said I've also just used some of that to buy another property so there's plenty of things you can do with the cash before you hit the balance point.

wapit

Sorry Thrugelmir maybe my calculations were a bit finger in the air.

What do you make it based on:

Higher Rate tax payer 40% and a 3.29% Mortgage rate?

Maybe I need to achieve better than 5% on a cash ISA, to make it worth while?

nexus7 I have a very similar amount in my offset savings account but none of it is in an ISA's. Hence my keen desire to start to moving it over to the ISA wrapper.

The more I think about it the more I think I should just start doing this transfer to ISA's anyways even if I can only break even.

Thanks for all your comments so far.

getmore4less

wapit wrote: »

Higher Rate tax payer 40% and a 3.29% Mortgage rate?

Maybe I need to achieve better than 5% on a cash ISA, to make it worth while?

5.48%

one down side to offseting CASH ISA is you loose the compounding.