Redeem or keep overpayment Fund?

MarkyMarkD

Martinslovechild wrote: »

I can kind of see your point MarkyMarkD, but if you have borrowings of £30K and an overpayment fund of £30K, then you have an 'effective' balance of £0 thereby earning no interest at all.

As it's not possible to 'earn' interest on the Co-Op mortgage account, if your overpayment fund is greater than the balance on the mortgage account then a letter is automatically sent out asking you whether you'd like to redeem the mortgage now or keep it going with future payments being drawn down from the overpayment fund.

What's the point in keeping an arrangement like that going? The original poster may as well just clear the mortgage now and put direct savings into an ISA initially and then into savings accounts once his £7K limit has been exhausted.

The OP said, and you've reiterated, that the net balance on the account was NIL, not a credit.

So the answer to your second paragraph is that you wouldn't have a credit, and so the issue of not earning interest on the account doesn't arise, surely. That's assuming that Co-op Bank wouldn't require repayments on the NIL balance account, though, which may not be the case (although they shouldn't object as your account wouldn't be in arrears but £30k in advance).

Nemo

As I couldn't see me wanting to withdraw any funds during the remaining lifetime of the mortgage, I've just phoned and completed. Withdrawing funds to invest elsewhere seemed too much hassle (and risk).

So that's me, mortgage free.

Thanks for the advice and debate.