Offset Mortgages and new savings tax changes

ds1980

We're currently paying 4% on our offset mortgage. I've always been comfortable at that rate even though I knew we could get cheaper rates and the one account rather than different accounts for everything suited our needs. However now the new tax allowance is coming about and interest rates may rise (although I don't think they're going anywhere fast for at least another decade!) it seems that we might be better off reducing the cost of our loan and using normal saving and high st accounts where necessary for additional money. I see there is no reference to the effect on offset accounts in :money: blog but this is a big deal for people with them as the old tax savings especially for higher rate earners no longer exists to a degree it seems. TSB have a 10 year fix at 2.89% which would see us pay off the mortgage in 10 years if not sooner with over payments when possible. What do people think? is now a good time for us to start looking to shift mortgage and which mortgage might suit us best? I'm also tempted with moving to first direct and maintain the offset route as I like the flexibility.....choices choices ?

AnotherJoe

I think you should switch in any event, thats a lousy rate !

Seems to me long as you are determined to pay off quickly there's no practical difference between an offset and a non offset mortgage. You say you like the flexibility but is it that useful if you are on a mission to pay off anyway?

And as you say the new rules on interest get rid of much of the benefit of an offset in any case. How much would you be paying for that flexibility?

getmore4less

Some on high rates might benefit from reviewing the mortgages anyway, plenty of offsets with lower rates.

All offseting does is have you borrowing less anyway.

although plenty are deluded they are getting a better rate on their savings.

the calculations are relatively easy as a ratio of rate differences against debt and offset pots, with a slight complication if there are change fees.