overpayment in offset mortgage

peterusa

Hi

I have £150,000 offset mortgage with £75,000 in linked savings with YBS.I am paying fixed 900£ monthly

will it be advantageous overpaying or keep the savings as it will offset the interest anyway.Iam generally very disciplined.

With regards to linked joint offset savings account is FSCS protection is maximum of 170000 (85,000 each)
thanks

eddddy

peterusa wrote: »

Hi
will it be advantageous overpaying or keep the savings as it will offset the interest anyway.Iam generally very disciplined.

Hi peterusa

Assuiming YBS offset works like other offset mortgages... I'd put it in the savings account. It is then readily accessible for cheap borrowing (e.g. for if another opportunity like Royal Mail shares comes along.)

peterusa wrote: »

With regards to linked joint offset savings account is FSCS protection is maximum of 170000 (85,000 each)
thanks

Essentially, you will be protected until your savings exceed your outstanding mortgage by more than £170k.

E.g. if your outstanding mortgage is £150k, your savings are protected until they reach £320k.

But if YBS went bust, any savings over £170k would automatically be used to pay down your mortgage.

E.g. if you had a mortgage of £150k and savings of £200k, and YBS went bust - you would end up with a mortgage of £120k and savings of £170k

Maybe this article explains it better: http://moneyfacts.co.uk/tips/mortgages/offset-mortgage120411/
(scroll down to 'What are the FSCS rules for offset savings accounts?")