Improving saving returns on money languishing variable rateoffset mortgage - ideas?

Cavemanu

hi there firstly my apologies if this is in the wrong place. I think it should be in savings but it relates to a sum of money currently 'languishing' in a variable rate offset repayment mortgage which is for paying off the mortgage and/or for unforeseeable expenses so not wanting to lock it up for long.

Currently £24K savings are sitting in a variable rate offset mortgage with 4 years to run. Current interest rate of mortgage is 0.75% (Base +0.25%). Allowed to hold up to 90% of mortgage owed as offset. We owe £36K on the house (so ratio is currently 67% but increasing with each monthly payment).

Our circumstances changed last year so now going from being 2 higher rate tax payers and a higher mortgage interest rate when we took out this mortgage some 6 years ago.

One of us is currently an income tax payer (approaching higher rate tax) the other is currently not an income tax payer. We have subscribed to our ISAs each tax year (mini cash) and intend to continue to do so whilst we can afford to do so.

Question is, are there better place to put the offset monies, without undue risk, just in case mortgage interest rises steeply. Currently not that bothered about paying off mortgage early as the interest rate is so low so any tips on improving savings returns on the money would be most welcome, as well as pros and cons. I'm sure we can do something more smart with the sums involved the money can be put to work a little harder than it is at the moment. Just need ammo for my proposal to my slightly more laissez faire OH!

latecomer

You could open a Santander 123 account and get 3% gross on £20,000 if you can meet the monthly funding requirements. There is a monthly charge of £2 but you get cashback on most direct debits which would normally more than offset this.