Offset Mortgages -- the Numbers

littlekim

Could someone help me please. I have an off-set mortgage, the rate is 2.99%. A good rate yes, but do i get a better saving by putting my savings in their savings account where i get no interest paid or put my savings in a 3% ISA account. The bank say the off-set account is the same as having a 6% savings account, is this true?

jizadine

littlekim wrote: »

Could someone help me please. I have an off-set mortgage, the rate is 2.99%. A good rate yes, but do i get a better saving by putting my savings in their savings account where i get no interest paid or put my savings in a 3% ISA account. The bank say the off-set account is the same as having a 6% savings account, is this true?

We have FirstDirect offest and whatever rate we pay on mortgage we get offset against the savings pot. I would have thought if it were the same as your product then, yes you would be better off by 0.01%. For the hassle I'd keep it offsetting the savings account. BUT - your product may be different....

Cheers
J

littlekim

Thanks, As i could only put 5,000 into an ISA per year, for a regular savings account what would the rate need to be before you can a better return putting your money in the savings account.

jamesd

2.99% in a cash ISA gets you the same benefit as the offset at 2.99%. The offset account at 2.99% is only about the same as 6% taxable if you're paying income tax at the 50% rate on your interest. No tax on cash ISA interest so you just need to get 2.99% to be the same. For a regular saver or any other savings account you'd need:

not a tax payer: 2.99% or higher
20% tax: 3.74% or higher
40% tax: 4.99% or higher
50% tax: 5.99% or higher

mortgagenomore_2

Offset question for the experts :j

I have an offset 0.55% above the base rate currently 1.05% anyway my question is no savings to offset and usually approx 100 overdrawn constantly does this affect my monthly interest ie simplified my interest is approx £27.00 a month would it be less if i kept my current account in credit?

Thrugelmir

mortgagenomore wrote: »

Offset question for the experts :j

I have an offset 0.55% above the base rate currently 1.05% anyway my question is no savings to offset and usually approx 100 overdrawn constantly does this affect my monthly interest ie simplified my interest is approx £27.00 a month would it be less if i kept my current account in credit?

Which offset mortgage product do you have?

mortgagenomore_2

Hi i have an IF offset tracker at 0.55% above base rate just curious if being in overdraft with current account will affect monthly interest on offset account?

Thrugelmir

Quick answer is no.

mortgagenomore_2

Thanks Thrugelmir for your help :cool:

Thrugelmir

Quick answer is no.