How many Mortgage-Free Wannabe's offset without offsetting?
Strummer22
Forumite 318 Posts
Hiya,
Are any wannabees doing the following? It seems good to me if you don't have much savings now, but (maybe you got a pay rise) you now have money spare at the end of the month...
Let's say you have a 2 year fix at 2%. You now have money to spare and are thinking of overpaying on your mortgage, but it comes with limits and penalties. Besides, you know you can get better than 2% on your savings, say, with a Santander 1-2-3 account. So you take the money you would have overpaid with and put it in the 1-2-3 account, and at the end of the 2 year fix you have the option of either remortgaging and chucking in the money you saved, OR if you find a good enough rate, just keep saving.
Does anyone do this? Do you find it easy not to spend what you've saved? Or do you prefer the security of building up equity so that you can't be stung by future interest rate hikes?
Are any wannabees doing the following? It seems good to me if you don't have much savings now, but (maybe you got a pay rise) you now have money spare at the end of the month...
Let's say you have a 2 year fix at 2%. You now have money to spare and are thinking of overpaying on your mortgage, but it comes with limits and penalties. Besides, you know you can get better than 2% on your savings, say, with a Santander 1-2-3 account. So you take the money you would have overpaid with and put it in the 1-2-3 account, and at the end of the 2 year fix you have the option of either remortgaging and chucking in the money you saved, OR if you find a good enough rate, just keep saving.
Does anyone do this? Do you find it easy not to spend what you've saved? Or do you prefer the security of building up equity so that you can't be stung by future interest rate hikes?
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Replies
As well as all the benefits you suggest, it offers me flexibility which I like. I have previously directly overpaid the mortgage but once I was below 20% LTV it made more sense to "offset". It needs a level of discipline to do this but otherwise it's been great for me!
Bexster