Offset Mortgage - Pay off or leave as is???

toppy007

I've had a First Direct Offset mortgage for the last couple of years (£400K fixed at 3.29%) paying on average £850 per month.

In the meantime an inheritance coupled with existing savings has meant that my savings will equal the mortgage amount and therefore I will effectively not be paying out on the mortgage in the future.

My plans/thoughts were to let the mortgage run for the remainder of the loan period (14 years) keeping the savings and mortgage 'matched'. I would intend to pay off the morgage in 14 years time and in the meantime invest what I was paying out on the mortgage in ISAs and other investment vehicles.

Can anyone see a flaw in this approach or suggest a better way of dealing with the situation i.e. should I pay off the mortgage now?

My wife and I are both 40% tax payers.

Comments appreciated.

getmore4less

if the offset is 100% then it makes no difference.

The disadvantage of paying it off is there is no instant access to the money should a project come up.

There are advantages to paying it off but I don't think they will apply since it sounds like you have other savings investments or will have very soon

havng a line of credit costing nothing and at the mortgage rate should you use it isworth keeping.


Also if you move to a more expensive house having the option to try to port the largest amount at what will probably be a good rate is worth keeping.

allthough you have the mortgage payment you could use the savings for cash flow, max out the ISA imediately and then retop up the offset to 100%

toppy007

thanks for the reply. Funny you should mention ISAs. I was wondering whether or not to take out savings to use for our investment ISAs 2012/2013 in one go or to trickle feed money every month.