Offset mortgage query

loubella_2

Hi,
I have an offset mortgage with First Direct of 164,000.(sorry the pound sign on my keyboard doesn't work). My DH is self employed so we have an emergency fund of 15,000 set aside in a linked savings account for a rainy day. We have several other savings accounts offsetting the mortgage but these are for spending that we expect to make in the near future such as holidays, car insurance etc. Hopefully, we won't need to use this emergency fund so my question is, should we pay this amount off the mortgage with a view to drawing it back down again should we need it? The terms of the mortgage do allow for this.
I am hestitant because seeing this in the account gives me a sense of security but if we can save interest and reduce the term of the mortgage....
Any advice would be apprecited.

Lois_E

What exactly are the rules on your mortgage product about drawing overpayments back down? In what way is your savings account "linked" to your mortgage? What interest rate (after tax) are you earning on the money in the linked savings account? What interest rate are you paying on your mortgage?

loubella_2

The savings accounts are linked to the offset mortgage so that they reduce the balance that interest payments are calculated. There is no interest paid on the savings because of this.
The mortgage offer clearly states that you can redraw any overpayments.
The interest rate is 2.79%.

Lois_E

If that's the case it doesn't seem as though it would make any difference to anything whether you OP or offset the money, so don't stress about it.