Offset Mortgage v ISA savings

cb101

Hi
I wonder if anyone could offer me some advice on using ISA savings for an offset mortgage. I am having to buy my former partner out of our house and I am looking to get a mortgage of around 65k over 15 years on a property worth 190k. I have about 35k savings in cash isas at rates from 4.1-5.1%. I am reluctant to tie myself into a discount/fixed term mortgage with associated high arrangement fees and exit penalties because I'm not 100% sure yet if I will remain in the area (Scotland by the way in case that makes a difference) and may end up selling up 6 months down the line- I just don't know. I've been given advice from various parties that an offset is the way to go given that it can reduce the term by 4 years or so. My worry is obviously that once I take the money out of the isa then I've lost that tax benefit for good. I understand that I.F. offer offset mortgages that allow you to keep the isas but I can't quite work out how that works.
Any advice would be appreciated
C

Bernie

...we have fully offset our mortgage with IF using 2x ISA and a TOISA covering half the mortgage sum, cash in a deposit and current account to cover the rest.

Effectively we have an interest-free loan for 10 years. Each year we can transfer £3,000 each from the offset deposit account into our ISAs. When we finally pay down the mortgage, we will have added £30K more into each ISA.

As a bonus, we have realised that we are receiving interest in the TOISA account in respect of the slight surplus we maintain.

:beer:

cb101

Thanks Bernie,
My understanding with the offset mortgage was that your savings are essentially earning the same "interest" as you are paying for the mortgage (although in reality they don't actually earn any interest) so if you have the ISAS linked are these not earning a lower rate of interest say 5% compared with say 5.9% mortgage rate? and at the end of the term are these still left as a tax free ISA? I think I'm getting a bit confused.............!

Bernie

Forget all the "equivalent interest" malarkey, it simply confuses the issue - well, it confuses me!

All the accounts in the offset earn zero interest while the mortgage is greater than the sum of the deposits. IF charges interest only on the difference between the sum of the deposits and the amount of the mortgage.

While they are in the offset, the status of the ISAs do not change - they're just another ISA/TOISA and can be manipulated just as any other.

:beer: