Can saving rates beat mortages?

utigers

Hi there for the last 2 years or so my mortgage has been 2% plus base and I have found it relatively easy to beat this with instant access Cash ISA's. I am now struggling a bit though as M&S are reducing it again to 1.3%. I guess banks margins are thin on borrowing/saving rates.

I do have equity ISA's/SIPP's and have enjoyed the rise there.

I am now wondering a bit like income seekers whether I should look at equities, to achieve mortgage beating rates?

With 'only' 2.5% to beat would something like a fixed income product or Trojan Capital/Standard GARS/CF Milton be wise to use?

Interest rates could be low for a while longer yet and I feel it is a waisted opportunity just paying your mortgage.

Glen_Clark

Isn't this what happened in the last Stock Market Bull Run?
I think they called them Endowment Mortgages
All ended in tears if I remember

utigers

I would be doing it only for a temporary measure......until rates start rising or I felt the product invested in has done its job (sell and pay mortgage). My mortgage is relatively small.

grey_gym_sock

equities are too risky for the short term.

borrowing at 2.5% in order to invest in equities looks like a decent bet to me, but only if you're doing it for a decade or preferably 2. it is going to be above many ppl's risk profiles, though - so i wouldn't expect everybody to do it (even if they have the option).

if you're not prepared to go into equities for that long, i wouldn't go into them at all - not with borrowed money. either take the hit of getting less interest than you're paying, in the hope that this will change, or just pay down the mortgage.

i take it that your mortgage doesn't allow you to overpay and later take that money out again?

jimjames

If it is the choice between paying off your mortgage at the normal schedule or equities then paying off it probably the safer choice.

If it is the choice between OVER-paying your mortgage (and it is repayment) or equities then I would take the equity route as your mortgage will still be paid off at the specified date but you then have the chance to build up portfolio over those 25 years.

Gromitt

Like yourself, I found it quite easy to beat my mortgage using various savings accounts, some fixed rate. I do still have about 10K in fixed rate accounts, but considering my mortgage is the offset type, I found it easier to just put it in a standard savings account with my bank to offset the mortgage.

Surprisingly, I have recently found out that I actually made a profit by having a mortgage! Even when taking all fees into account. I still have about 10 years left on my mortgage, but these are already paid off via the offset, so they'll incur no interest.