How paying more saves you money?

Harry_Boyle

Thrugelmir wrote: »

With savings interest rates at current levels. Then opportunity to outperform is severely restricted.

Even junk bonds are down to 6% gross yields. As investors chase returns downwards.

Would anyone use a cash savings account as a repayment vehicle? I doubt you'd find a mortgage provider who would accept that, and you might as well just go with a straight repayment mortgage.

Thrugelmir

Harry_Boyle wrote: »

Would anyone use a cash savings account as a repayment vehicle? I doubt you'd find a mortgage provider who would accept that, and you might as well just go with a straight repayment mortgage.

Was only a short time ago that finance houses were offering 5 year fixed term ISA's at above 4% rates.

So for example borrowers with LLoyds and Nationwide on 2% above base SVR could make money by saving rather than overpaying.

What's the best 5 year fixed term ISA available today?

shortchanged_2

Harry_Boyle wrote: »

Yep, the 10 year rates are nowhere near as competitive as 5 year rates and didn't seem to be very good value. There are only a few providers willing to lend over that sort of duration and they don't seem inclined to compete against each other for the business. Plus I guess the customer base is quite small for 10 year fixes, so there isn't much incentive to cut rates.

Do you not qualify for an IO mortgage at the moment then?

Because there are still IO deals available if there is enough equity in the property.

michaels

My offset is 2.49%, fully drawn as my savings are earning on average 4% tax free instant access in savings accounts. I fear finding such savings rates for the new ISA season is going to prove more tricky...I suspect if I asked the lender they would prefer for the offset savings (repayment vehicle) to be in a fund where the capital was at risk - you've got to love the 'rules'

Harry_Boyle

Thrugelmir wrote: »

Was only a short time ago that finance houses were offering 5 year fixed term ISA's at above 4% rates.

So for example borrowers with LLoyds and Nationwide on 2% above base SVR could make money by saving rather than overpaying.

What's the best 5 year fixed term ISA available today?

Sorry, I don't think you understand my point. Saving money into a bank account, regardless of whether it's tax efficient (i.e. a cash ISA) is not classed as investing and you'd struggle to find a lender who would allow cash savings as an approved repayment vehicle.

Harry_Boyle

shortchanged wrote: »

Do you not qualify for an IO mortgage at the moment then?

Because there are still IO deals available if there is enough equity in the property.

Are you looking to go IO on your mortgage?

Thrugelmir

Harry_Boyle wrote: »

Sorry, I don't think you understand my point. Saving money into a bank account, regardless of whether it's tax efficient (i.e. a cash ISA) is not classed as investing and you'd struggle to find a lender who would allow cash savings as an approved repayment vehicle.

I fully understand your point. Mine was that for some years using a deposit account was an option for many.

FSA rules only became effective in the autumn. However lenders had already started to change their own rules a while back. In the main quietly and without fuss. Prior to FSA intervention leaving existing borrowers alone in the main.

Thrugelmir

michaels wrote: »

I fear finding such savings rates for the new ISA season is going to prove more tricky...

Our balances are starting to mature. The first this April. Not very attractive! To say the least.

shortchanged_2

Harry_Boyle wrote: »

Are you looking to go IO on your mortgage?

No you're alright thanks.

Thrugelmir

Harry_Boyle wrote: »

It's always the case that a few people abuse the system and the rest of us have to pay.

May have more to do with Santanders home market rather than an attack on UK mortgage holders. Santander needs to repatriate capital.
Mortgages are capital intensive and low profit margin.