Energy Price Cap announcement: Watch Martin Lewis explain what it means for your electricity and gas bills this winter
MSE News: Offset mortgage costs are down but are they best?

1.7K Posts



This is the discussion thread for the following MSE News Story:
"The drop has prompted some experts to say they are an option for homeowners who want a decent savings rate ..."
"The drop has prompted some experts to say they are an option for homeowners who want a decent savings rate ..."
0
This discussion has been closed.
Latest MSE News and Guides
Replies
The flexability we now have and the feeling of security of having a large offset pot and being "ahead" in our mortgage payments in uncertain times is very comforting.
The fact that rates for normal and offset deals are now even closer means you should look at offset mortgages and I think that self employed people should consider them.
If you look on the mortgage free board you will find many posters using them to reduce the mortgage and the " interest" they pay
"If you used that cash as part of your mortgage you may also lose the tax-free status of the Isa when the mortgage is paid off as few providers ring-fence this money."
How is that possible ?
I believe the article is highlighting that not all offset mortgage providers allow ISAs to be directly linked as one of your offset accounts. You would therefore need to move the ISA funds into their standard linked savings account, thereby losing their tax free status.
Barclays are one of the companies which allow ISAs to be offset, and this is the main reason why we went with them for our offset last year.
As it looks like we will be 100% offset in a couple of months, my wife and have opened two of their new Golden ISA accounts within the mortgage on the grounds that we will be then be able to un-link them from the offset when we are 100% offset and therefore start earning tax free interest on them again.
Hope this helps.
• The poor only have expenses.
• The middle class buy liabilities they think are assets.
That looks like ISA was offset during the term of the mortgage but lost its status once the mortgage is paid off. If ISA wasn't linked to the mortgage at all, paying the mortgage off would have no effect on it.
One thing I would warm people against; if you suffer from impulse purchases, then this type of mortgage product might not be for you, as they often allow you to withdraw all over payments.
[STRIKE]Original: Jun 2041[/STRIKE], Current:Nov 2022, Target: Oct 2020
Debts
[STRIKE]2010/02 £14,500[/STRIKE], 2011/02 £13,000, Target 2012/01 £0K
11k in 2011 challenge #32 4.8%