CAM, Flexible or DIY?

LeeJ_2

I am 51 years of age. My current mortgage is about £115,000. I have savings of approx £20,000 with no loans/credit card debt. I really want to get serious about paying my mortgage off (something I should have done long ago). I am trying to decide on the best approach between the three options in the title.

a) CAM - I like the idea of a single account where I can see at a glance my overall debt and the fact that the mortgage immediately appears to have reduced because the savings offset that amount. But I understand that I may pay a premium in terms of interest rates for this kind of account. Is that premium too much for the flexibilty?

b) Flexible mortgage - Sounds like a CAM except that I still see all the savings/debts separately. I believe that I may get a better rate with this type of deal than I would with a CAM (is that correct?)

c) DIY - I suppose I could remortgage taking out an interest only mortgage and save in a high interest (ISA etc) account. Would this be the best of all the options? It would require more discipline of my part. If I did this would I be better making regular overpayments from the savings account to reduce the mortgage?


Having read several threads on the forum about CAM/flexible mortages I expect a divide in opinions but would still value any thoughts on this particularly from those who have been down one or more of these routes themselves.

Thanks

Lipstick_2

LeeJ wrote: »

I am 51 years of age. My current mortgage is about £115,000. I have savings of approx £20,000 with no loans/credit card debt. I really want to get serious about paying my mortgage off (something I should have done long ago). I am trying to decide on the best approach between the three options in the title.

a) CAM - I like the idea of a single account where I can see at a glance my overall debt and the fact that the mortgage immediately appears to have reduced because the savings offset that amount. But I understand that I may pay a premium in terms of interest rates for this kind of account. Is that premium too much for the flexibilty?

The answer to this is not straight forward as it depends on each individuals circumstances.

Generally, the pivatol point to making an offset situation work favourably in someone's cicumstances is around £30,000 as after this figure the offsetting of interest starts to work in your favour.

Having said that, it also depends on your income, as a higher rate tax payer would certainly benefit sooner than a standard rate payer

LeeJ wrote: »

b) Flexible mortgage - Sounds like a CAM except that I still see all the savings/debts separately. I believe that I may get a better rate with this type of deal than I would with a CAM (is that correct?)

Again, based on each individuals circumstances.

* Interest rate of the mortgage? (is it the best)
* Is the mortgage a monthly or daily rest ( most flexible's tend to be daily)
* Are you taking full advantage of your ISA allowances?

LeeJ wrote: »

c) DIY - I suppose I could remortgage taking out an interest only mortgage and save in a high interest (ISA etc) account. Would this be the best of all the options? It would require more discipline of my part. If I did this would I be better making regular overpayments from the savings account to reduce the mortgage?

I think people should remortgage every three years anyway to take advantage of the discounts offered by lenders.

There is no clear black & white answer to your question, it is clearly the best one to suit your circumstances.

Luv

Lipstick