Should I pay off my mortgage discussion

jamesd

nettieB, short term the offset is better. Long term the ISA is better.

If you will be able to use the full ISA allowance every year then you should put the ISA contributions before the mortgage offset account.

If you will have difficulty contributing the full ISA amount each year then you can use the mortgage offset account, knowing that you won't be limited by the annual ISA allowance.

Since you're a higher rate tax payer it's likely that you'll be in the group that's better off using the ISA first.

SouthAfrican

I've read the article posted by moneysavingexpert regarding mortgage overpayments and was wondering if moneysavingexpert could provide us with a similar calculator to determine if putting savings into a cash ISA gives a better return than making overpayments on a mortgage. I have a fixed rate mortgage @ 5.85% and £10K sitting in a cash ISA which every 5 minutes reduces it's rate (Started at 6.3% now 2.1%)! The article only makes reference to ISA's being better than mortage repayments but how does one do a like for like comparison?

pennypincher61

I owe approx £48,00 on my mortgage

I have about £7,500 in savings which is offsetting it.

And I'm overpaying by £250 a month to make the most of the low interest rates.

As interest rates are so low should I keep my savings offsetting or would it be better to put most of it in an ISA ?

help!!!

Welshlassie

SouthAfrican wrote: »

I've read the article posted by moneysavingexpert regarding mortgage overpayments and was wondering if moneysavingexpert could provide us with a similar calculator to determine if putting savings into a cash ISA gives a better return than making overpayments on a mortgage. I have a fixed rate mortgage @ 5.85% and £10K sitting in a cash ISA which every 5 minutes reduces it's rate (Started at 6.3% now 2.1%)! The article only makes reference to ISA's being better than mortage repayments but how does one do a like for like comparison?

You should try and fill your ISA allowance each year and then overpay anything extra on your mortgage. Even if the ISA interest rate is below you mortgage rate you will be better off in the long run because you will still have the tax free wrapper when interest rates eventually start to rise. You can then use this as rainy day/emergency funds that everyone should have before starting to overpay on your mortgage.

HTH

Welshlassie

pennypincher61 wrote: »

I owe approx £48,00 on my mortgage

I have about £7,500 in savings which is offsetting it.

And I'm overpaying by £250 a month to make the most of the low interest rates.

As interest rates are so low should I keep my savings offsetting or would it be better to put most of it in an ISA ?

help!!!

You can only put £3,600 into a cash ISA each year. Does you mortgage allow you to offset ISAs (some do) that way you get the best of both worlds.

It is recommended that you have between 3-6-9 months income in savings as an emergency fund. It doesn't really matter where you have them as long as they are accessible.
Martin does recommend filling you ISA allowance each year before overpaying your mortgage.

HTH

pennypincher61

thank you

I just rang the Yorkshire buiding society who I'm with but I cant open an ISA with them that will offset

does anyone know who does this?

I'm with First Direct for my other banking, I wonder if they do.....

hmmmmm, will ring them and keep you posted!

pennypincher61

No, First Direct don't either, they said it would be a double whammy and great if I could find someone who does that!

I'm going to speak to them and compare their offset with Yorkshires, it would be good to have bank account and mortgage all together, and sooooo much easier.

The Yorkshire have some ridiculous online log on, so I cant even log in easily to see what rate they're charging as I dont have the piece of paper with the huge long ID number with me!

I love First Direct, nice simple log in !

( has anyone tried Nationwide online banking- OMG how complicated!)

nettieB_2

try Intelligent Finance - they do offset ISAs I believe. However, I didn't go with them at the time, because their rates were alot higher for the luxury of this benefit.

CFC

Hammerite wrote: »

Right, here goes. Currently have a mortgage circa 90k. Have just come into inheritance money to tune of 95k. Mortgage term remaining is 22 years, current mortgage rate is 2.44 percent (lifetime 0.44 above base rate/collared at 2). Wife and I are basic rate taxpayers. Terms of mortgage allow overpayments of up to 500 quid a month. Paying off in total incurs early redemption fee of 2.5 per cent.
Should we (a) stick the money in a/variety of shoparound savings account provided the net interest rate, of course, is a good deal better than mortgage rate. (b) pay off the extra 500 quid pm from now until whenever. (c) pay off thwe heap and give the bank their early redemption fee. (d) AN Other (e) Go on a holiday to cure the spinning head.
Any advice gratefully accepted guys.

Perhaps you should consider changing to an offset mortgage with your 90k as that would mean that you pay no interest at all on your mortgage, while retaining the cash in the bank. That is unless you can get a better deal from a savings account. When does your early repayment charge run out, or is it at any point during the life of the mortgage?

chrisali_2

Hello .I am a new forum member and a complete ignoranus as far as mortgages & savings are concerened, so please forgive me.
We have 19 months left on our part repayment (£1735.64) and part endowment (£38170.47) mortgage fixed at 6.29% An endowment policy has matured (£22500)and we are considering using this to part repay the capital on my mortgage rather than invest it as interest rates on savings are low. The penalty for doing this is £675. Our monthly payments would reduce by approx £100 but I think we would keep them at the same level we are paying at £282 .
Would anyone be able to make any comments on our plans.
Thankyou
Chrisali
Ps I am a non tax payer.