Leave my money in offset account??

cslogg

I posed this question some time ago and I thought I would give it another go to see if things had changed.
I have an offset endowment mortgage with the Woolwich (now Barclays)
It finishes in around seven years and I owe £37000.
I also have £26000 sitting in the same account.I am also in a position to add another £500 per month.Should I do this and help offset my mortgage or is there something else I should be doing to get a better return for my money?


Thanks
cslogg

WildHaggis

The answer depends on (a) your attitude to risk and (b) your time horizon.

You are earning a tax-free return equivalent to our mortgage rate. Guaranteed. Stock market investments may do better than this, and so could premium bonds. Both are a 'gamble', the risk is reduced by the time horizon for your investment.

Traditionally,
The stock market has achieved around 7% pa
UK property has achieved around 5.5% pa
UK bank interest has achieved around 3% pa

Kiernan809

What's your rate on the non-offset portion?

OverlandLandy

It is good to Offset as much as you can if you pay high rate tax.
It will also mean that most of your payments will be reducing the outstanding amount and not paying for the loan in terms of interest payments.

Have you looked at how much you have saved (my statement from The Woolwich/Barclays shows 'interest saved' and is calculated on a daily basis).

I'm around 1.5 years 'ahead of schedule' at the moment - this may not sound like much but I still have 22 years (now 20.5)to go on a 24 year mortgage.

Its a personal choice I guess. I like it. It makes the savings look real and gives you an incentive not to spend money, it reduces tax and makes filling in your tax return easy (as you don't earn any interest on your savings!)