Offset Mortgage against CASH ISA?

RenovationMan

I'm surprised that people would want to hold so much money (£50K, etc) in cash. Are you not afraid of your capital being eroded by Inflation?

Please correct me if I am wrong, but it seems that people are limiting themselves to a very small pool of mortgage providers (perhaps even to a single provider as the only one who seems to offer this is Barclays) and so could be paying more in interest for their Offset Mortgage than if they had access to other providers. All this so that they can invest a significant amount of their wealth in an investment that will lose them money in the long-term.

On the surface it seems to be a double whammy of expensive investment vehicle and poor investment return. Happy to be corrected though.

getmore4less

Happy with my 1.45% Barclays offset Mortgage so actualy have the money sitting in a savings account.


Offsets are not an investement, they are debt reduction.

nexus7

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.

How quickly you move it just depends on how quickly you are to break even with the cash and outstanding balance.

I'm surprised that people would want to hold so much money (£50K, etc) in cash. Are you not afraid of your capital being eroded by Inflation?

It's not a long term strategy, however whilst the 3.3% Issue 9 Santander ISA exists (which moves up and down with the base rate so will always beat my First Direct mortgage at 2.58%) I see very little harm in keeping it the way it is.

I've just bought one BTL investment property and the ISA will basically be the deposit for the next within a year or so.

I believe that even the best mortgage at the moment even with a 40% deposit is around 2.49% and there would still be a hefty fee to gain a mere 0.09%.

vacheron

We found the advantage of keeping our ISAs in the offset mortgage was that it was always there within the ISA wrapper so that in the event that an ISA came along with a rate which exceeded our mortgage rate we could move the whole amount (c.55K) to that and benefit overall.

The extra bonus is you can keep topping up your offset ISA each year with the annual ISA allowance so that when you come to remove it you could have built up quite a tidy sum in a tax free wrapper.

When our mortgage became fully offset we moved the ISA to a Natwest e-ISA. (Though we actuality left a few pounds in the Barclays offset ISA to keep it open so that it is easy to transfer the funds back quickly if the Natwest rate drops or our mortgage rate increases).

Although the interest is exactly the same as our mortgage (3.49%) this leaves room in our offset to put taxable savings into on an ad-hoc basis whenever any become available. Plus we now benefit from ISA interest compounding as previously mentioned by others.

bubieyehyeh

Intelligent finance also allow you to offset cash isas. However I don't think they offer mortgages anymore to new customers. However now it not being sold off to co--op things may change.

princessdon

getmore4less wrote: »

Happy with my 1.45% Barclays offset Mortgage so actualy have the money sitting in a savings account.


Offsets are not an investement, they are debt reduction.

Good god I am so green eyed at that rate!