Quick question about an offset mortgage

Miss_Moneysaver

Hi,

I have just started overpaying on my mortgage and also putting another £835 in an account (as savings) in an offset arrangement linked to the mortgage. I have recently gone full time at work (after 12 years PT) so I have extra money to play with.

I have an endowment due to mature next Spring and inheritance so I plan on adding the £10K (£835 x 12) to these and paying it off next year - whoop whoop!

My question is...if the money sits in the offset account (Woolwich/Barclays) will it still reduce the interest in the same way as if I had added the £835 to the overpayment? Would I be better paying it directly off the mortgage instead of saving it in the offset? I wanted to 'hang on to it' in case anything came up over the next 12 months (big bill) - hopefully I won't need it for this.

dave23

I have a Woolwich/Barclays offset account and yes money in the offset does the reduce the interest just as if you overpaid but the benefit of having it in the offset is it is still there if you need it in an emergency. At one point I was paying no interest because my offset balance was higher than my outstanding mortgage balance.

getmore4less

offset rather than overpay as you keep access to your money.

once 100% you pay no interest.

Change your normal pay to reduce payment rather than stay the same/reduce term and let the mortgage run the full term.

Acees to cheap money cash flow whenever you need it.