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Does it make any difference?
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hugo15
Posts: 120 Forumite


I have an offset mortgage with Yorkshire Building Society, which has separate mortgage and savings accounts, but adds them together for the purposes of interest calculation. I currently overpay by around £100 per month and stick around £500 per month in the savings account. Does is make any difference doing it this way or would I be better off by overpaying more (subject to the max allowable).
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I doubt if your money in your savings account can be counted "twice" - once for offsetting purposes and once for making money on your savings - if it does i'll be moving banks tomorrow!
So, if your interest rates on your savings are higher than on your mortgage keep it as it is.
I would imagine if it's an offset, you will be entitled to overpay as much as you want.
Hope that helps Hugo?Feb 2012 - onwards MF achieved
September 2016 - Back into clearing a mortgage - Was due to be paid off in 32 years in March 2047 -
April 2018 down to 28.00 months vs 30.04 months at normal payment.
Predicted mortgage clearing 03/2047 - now looking at 02/2045
Aims: 1) To pay off mortgage within 20 years - 20370 -
Hi
I have an offset too, and my understanding is that it doesn't matter which pot your cash/debt is in. The only figure used by the bank for its monthly calculation is the ammount you owe overall.
Hope that helps.
SSCompletely Debt Free 2009:j
Completely Mortgage Free 2013:j0 -
originalmiscellany wrote: »I doubt if your money in your savings account can be counted "twice" - once for offsetting purposes and once for making money on your savings - if it does i'll be moving banks tomorrow!
So, if your interest rates on your savings are higher than on your mortgage keep it as it is.
I would imagine if it's an offset, you will be entitled to overpay as much as you want.
Hope that helps Hugo?
The savings account just offsets the mortgage so no interest is paid on the savings, it just reduces the interest paid on the mortgage. I was just wondering if it makes any difference which pot I put the money in, overpaying into the mortgage pot or putting the money into the savings pot.0 -
Oh, in which case, not a difference! I was speaking from my experience where I have a savings account with a marginal interest rate. Sorry for confusing you then in that case.Feb 2012 - onwards MF achieved
September 2016 - Back into clearing a mortgage - Was due to be paid off in 32 years in March 2047 -
April 2018 down to 28.00 months vs 30.04 months at normal payment.
Predicted mortgage clearing 03/2047 - now looking at 02/2045
Aims: 1) To pay off mortgage within 20 years - 20370 -
originalmiscellany wrote: »Oh, in which case, not a difference! I was speaking from my experience where I have a savings account with a marginal interest rate. Sorry for confusing you then in that case.
Not a problem. Thanks for confirming that it doesn't make a difference.0 -
I have an Offset Mortgage too and there is no difference as to whether you save the money or overpay on the mortgage. However, I do overpay £59 a month (odd figure because I rounded up my monthly mortgage payment) because psychologically I feel better for overpaying, even though I also put money in our savings accounts linked to the mortgage.
I look forward to the day when I will be fully Offset, even though it's a long way offwhen the amount I have in savings is the same as the mortgage balance, so that I can then start earning interest on my savings.
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I only over pay the £100 because I fixed the monthly payment at it's previous level before the rates went down. The rest gets put in the savings account.
I really want to get my mortgage paid off asap so that I can then start to think about additional pension savings to supplement my company defined contribution scheme and building up a potential university fund for my two daughters.0 -
I only over pay the £100 because I fixed the monthly payment at it's previous level before the rates went down. The rest gets put in the savings account.
I really want to get my mortgage paid off asap so that I can then start to think about additional pension savings to supplement my company defined contribution scheme and building up a potential university fund for my two daughters.
We have almost 13 years remaining on the mortgage and I am hoping to pay it off at least 4 years earlier. My reasons for this are similar to yours. At the moment our mortgage is due to be paid by Feb 2026 when DS1 will be 18 years old and DS2 will be 15 years old. If I can pay the mortgage off at least 4 years earlier, we will have more money to put towards the children's savings for University fees, help them with house deposits etc.
I have a Stocks and Shares ISA (which the children won't know about) which I save into monthly, but the children won't get access to this as I will withdraw money from it when they are older and need help with University fees, college, house deposit etc.
Our children each have a savings account where any money from Christmas/Birthdays is paid into and I know this sounds mad, but their money is in savings accounts linked to our mortgage (so that it helps to reduce the interest paid and reduce the term) so that it is being used to offset against it, however I add on a monthly basis to the accounts the interest they would have had if it was in a 'normal' savings account so that they don't miss out.0 -
Would the fact that I have some of the mortgage on interest only and some on repayment make any difference to my original question?
Being inspired by the MFW diaries and some great tips.
Tackled DD#1's savings tonight too...... 0.75% interest........ not for much longer!!0 -
Hugo - if they're both being repaid at the same rate, then you will be doing fine - it simply means that you are going to be paying a chunk of mortgage off as it is - if you are able to keep it as it is, it simply means you're making a repayment /overpayment as it is, so no concerns from me.
Well done on DD's 0.75%. Have you been able to increase it to much higher?Feb 2012 - onwards MF achieved
September 2016 - Back into clearing a mortgage - Was due to be paid off in 32 years in March 2047 -
April 2018 down to 28.00 months vs 30.04 months at normal payment.
Predicted mortgage clearing 03/2047 - now looking at 02/2045
Aims: 1) To pay off mortgage within 20 years - 20370
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