Should I pay off my mortgage discussion

Floxxie

Thanks jamesd, so it doesn't matter how much you have in an offset if the savings rate is higher than your mortgage rate, you would make money? Is that correct?

Floxxie

bros

I have a car worth £20,000 I now have a company car so this is a pure luxary, should I sell it and pay it off some of my morgate, I have only 5yrs left on the morg, owe £72.000 how many years would I knock off by doing this

jamesd

Floxxie, that's right.

bros, "should" is a question that only you can answer. I wouldn't sell it to pay off any of the mortgage, though. I'd stick the money into high interest savings accounts or investments. Assuming that I had a mortgage rate lower than the investments. I'd be happier seeing a healthy balance there than a lower amount of cheap mortgage borrowing.

lpambarr

Can anyone refer me to a good calculator that will show how overpaying my offset mortgage is better (or worse) than opening a high interest savings account? When I do this myself on a cobbled together excel spreadsheet, it would appear that overpaying my offset mortgage (rate 5.5%) only nets me the equivalent of 4% interest over 10 years. It looks to me like I would be better paying into a high interest account at 7+% AER (5% net). Am I right??? Thanks to anyone who can help!

lpambarr

Is it as simple as whichever has the higher interest rate? Based on my calculations (which are probably not correct!) overpaying my offset mortgage (rate 5.5%) only nets me the equivalent of 4% interest over 10 years. It looks to me like I would be better paying into a high interest account at 7+% AER (5% net). Am I right? Please can someone help?!:embarasse

jamesd

lpambarr, the mortgage is not taxable so 5.5% mortgage is equivalent to 5.5% after tax or ISA savings rate. A 7% taxable account would be 5.6% after basic rate tax so that would be better than putting the money into the offset account.

If you or a spouse aren't paying basic rate tax, perhaps because you're not working and not making enough interest to go over your personal allowance, then there's no need to deduct tax and you can tell the bank that they don't need to do it. Then a 7% savings account would be 7% tax free and better than a 6.99% mortgage offset account.

co123456

I've a 36.6K Nothern Rock mortgage with a 6.09% deal ending 1st June 2009.
My plan is to reduce my mortgage to 12K. I'm banking on a couple of investments paying a fair amount, mixed with plenty of overpaying.

I've two options:

1. When 1st June comes, Stooze cash from any availble 0% credit card and pay off my mortgage, thereby placing the debt onto credit cards. This makes me mortgage free, however I lose the ability to obtain ready money, fast. Quite motivating though.... burning the bridges.

2. When 1st June comes, Stooze cash from any availble 0% credit card and pay off all but say 10 Pounds, thereby placing most of the debt onto credit cards. This is half way there. A safer option, however it will require more disipline to shift the remainder of the debt.

What do you think?

Thanks
Cheery

jamesd

Why pay off the mortgage when a basic rate tax payer can make more than 6.09% after tax elsewhere? Just keep making money with your stooze pot and use some of the interest you make to pay the mortgage interest.

Dithering_Dad

jamesd wrote: »

Why pay off the mortgage when a basic rate tax payer can make more than 6.09% after tax elsewhere? Just keep making money with your stooze pot and use some of the interest you make to pay the mortgage interest.

Where can you make more than 6.09% after tax?

jamesd

The Halifax International Regular Saver Account pays 10% before tax for one year on variable monthly contributions from 100 to 2,000.

Cash ISAs are around that can beat 6.09% tax free for term deposits.