Offset mortgage dilemma

blondeambition_2

We currently have an offset mortgage with I.F. We owe £41K on the mortgage, but have £30K in isa's and £28K in savings, all linked to the one account. So the dilemma is - do we pay off the mortgage or stay as we are, not sure on the best options. At the minute we are not paying any interest on our mortgage because we have more savings than we owe, plus we dont get taxed on any of our savings but is this the best option...:eek: Please Help

cazmanian_minx

I'd leave the ISAs alone because they'll go on providing tax-free interest after you no longer need them to offset the mortgage. If you want to pay off a chunk, do it from the savings but leave enough in there that if you have an emergency you still don't need to touch the ISAs.

Caz

roswell

you have 58 000 in savings and a 41000 mortgage, I would look at getting either some of the isa`s to a new home or the savings so that you arent over offset. maybe even run with a bit of a buffer that you are paying interest on say 2000 so that you are earning interest on the cash that = more than the mortgage debt accruing interest.

^ that doesnt make sense really what im trying to say is have 39 000 offset and put the rest into interest bearing accounts thsi will give you the best of both worlds

jamesd

Ruffler Bank pays 5.75% interest on cash ISAs so one easy step is to ask them for a transfer form and put the ISA money there. Minimum 15000 per account. I assume that your mortgage interest rate is less than this.

If you aren't doing it yet you could usefully contribute 7000 per person per year to a stocks and share ISA with a selection of funds, ideally 10-15 in different parts of the market and world. It is expected that the Budget will make it possible to move money from cash ISAs to stocks and shares ISAs so that would make it possible to transfer the cash ISA money if you like.

With moderately risky investments you should be able to gain twice as much from investing as from saving. But you will see some downward fluctuations in value lasting as long as several years along with the general upward trend.

If you do go the stocks and shares ISA route, please search for asset allocation here and learn more about it.