Overpay on Offset Mortgage or put money in savings?

John424

I question the offset of the kids accounts, kids accounts are more generous and offer tax breaks, 3.75% can be beaten for them.

Trying_to_be_good

I have an extra column in my mortgage spreadsheet that shows the actual balance less the offset savings. Actually, I then have ANOTHER column which shows actual balanceless offset savings less ISA balances as they're at a separate building society. Then a graph showing all three lines reducing on current plans. And a line if it had been a normal repayment mortgage with no overpayments or offset.

My OH thinks I have OCD...

sweetdaisy

John424 wrote: »

I question the offset of the kids accounts, kids accounts are more generous and offer tax breaks, 3.75% can be beaten for them.

With the Children's accounts they have £7,000 between them and as I am not gaining interest on the accounts, I add monthly to their account what they would have had in interest, so that they are not missing out. I also have a Stocks and Shares ISA which I save £100 a month into which will be used to fund the children's college/university fees, help them on the property ladder etc when they are older.

sweetdaisy

ValHaller wrote: »

Your spreadsheet is misleading you. Suppose you have £10000 in your offset.. Your spreadsheet is telling you when you will have paid the mortgage down to £0. But at this point you will have £10000 in your offset. Your mortgage is actually paid off when the mortgage balance goes down to £10000 - you clear the mortgage with the offset.

I am not very good with spreadsheets, but I have used FinancialBliss' spreadsheet which is very good. I don't have a column that includes what we have in Offset (as it changes all the times due to bills being paid from the Current Account, so it's always changing), so it's only based on days in the month, interest rate, monthly mortgage payments and any additional overpayments made.

When the interest is added to the mortgage at the end of the month, I adjust the mortgage balance for that month as it is usually around £40 a month less than the spreadsheet works out because it takes into consideration our offset accounts.

I was under the impression that this gives me an accurate (ish!) timescale of when the mortgage will be paid off. However I know that when we are fully Offset I will be able to clear the mortgage and will no longer be paying any interest, but I don't want to empty the savings account completely to pay off the mortgage - as we will be left with no rainy day savings - so think that once I am fully offset I can start making/paying lump sums off the mortgage from the offset savings account.