Investing Savings

funkey_monkey

Hi,

I've got approx £250k in savings which I'm holding for a mortgage - although I hope not to need all of it.

I've got most of my funds tied up in ISA's and Index Linked Certs, but approx £100k is in normal savings account earning less than inflation.

My plan for the mortgage is to get an offset mortgage and offset the entire price of the property against it (meaning no interest on the purchase). Some questions on this:
1. With the FSCS covering up to £85k, where would I stand with say £160k, is there an exemption in this scenario or is the money at risk?
2. Would providers be willing to cover 100% on an offset mortgage?

What is the best way to invest my money - or more to the pint what would you do?

I am going soon to an IFA, but I just want to guage some opinions and thoughts before I do so.

Also, I assume that an IFA will want a % cut for their work. How do I minimise this especially as margin are so low at the minute for savers.


Thanks.

Linton

Not quite sure why you are wanting an offset mortgage if are intending to offset all of it.

I cant say what I would do in your circumstances as I dont know what these are. How old are you? Do you have other assets? Do you have a pension? How much can you save from your income? What is the interest rate on the offset mortgage?

What I would seriously look at is not offsetting a significant amount, perhaps £150K, of the money and using that to invest in funds. Cash savings are never going to provide a return sufficient to protect you from inflation. Sensible investing should in the long term give you a better return than the interest you pay on your mortgage.

funkey_monkey

Linton wrote: »

Not quite sure why you are wanting an offset mortgage if are intending to offset all of it.

My thought was that as my savings were getting me no reasonable return then it might be better to minimise interest payments on the mortgage itself.

How old are you?
Do you have other assets?
Do you have a pension?
How much can you save from your income?
What is the interest rate on the offset mortgage?

Mid 30's.
No.
Yes.
£1000pm.
I've not checked, but as I was going to offset the full amount, it should not matter.

Cash savings are never going to provide a return sufficient to protect you from inflation. Sensible investing should in the long term give you a better return than the interest you pay on your mortgage.

I realise that and I have approx £7,500 in shares and a further £4,000 in a S&S ISA. Neither of which I really understand - in terms of how shares work. I'm wary of investing in things I do not know or understand as the S&S ISA is performing poorly.

jimjames

funkey_monkey wrote: »

I realise that and I have approx £7,500 in shares and a further £4,000 in a S&S ISA. Neither of which I really understand - in terms of how shares work. I'm wary of investing in things I do not know or understand as the S&S ISA is performing poorly.

S&S ISAs do not perform one way or another. The contents of the ISA are what increases or decreases so it would be worth finding out what you are invested in.

Having more invested in direct shares than funds is much more risky - funds will spread the risk over many companies but you need to know which funds and shares you are invested in.

Eco_Miser

funkey_monkey wrote: »

Originally Posted by Linton

Not quite sure why you are wanting an offset mortgage if are intending to offset all of it.

My thought was that as my savings were getting me no reasonable return then it might be better to minimise interest payments on the mortgage itself.

So why get a mortgage, and pay the arrangement fees, at all?
Why not just pay cash?

Notfarfromtheborder

I'm currently sat with a mortgage which is 100% offset, if that's the way you wish to go then just open a linked saving account to the mortgage, apply as normal for a mortgage with a decent deposit to get decent LTV and then just whack in a chuck into the savings account to cover any outstanding balance.

There are many arguments that would advise against this, i.e., higher saving rates than mortgage rates etc, pension tax relief at your highest tax rate etc but this would depend on whether you feel you may need to withdraw some of the offset cash in the future/ whether you would be happy tying up cash for the next two decades should a higher pension contribution be a choice

The only reason I have not closed mine is that I can draw down six figures should I wish within the next 20 years should I need to, once I have built up a decent cash cushion then I'll close it.