quick bit of advice needed please

rockrat

i have recently decided to offsett my mortgage, and have done so in such a way that will put equity cash into the offset savings account, so in effect so long as i dont spend it - i dont pay for it!

Part of the reason for getting some additional cash was to pay off all my debts with the main one being a £2k car loan with 12 months still remaining.
But, i find myself thinking that I could continue to make the monthly payments, and leave the cash in the offset account and possibly reduce my term and interest a little , but it would make the next 12 months very tight.

i have just looked at the banks offsett calculator to see if it would make a real difference to the overall time and interest saved by not paying off the loan and struggling through the next 12 months. But it showed there was no real benefit at all, almost insignificant.

would you guys agree? should i just pay it off.

details.
loan @ 5.9% - £243 a month
new mortgage @ 6.09% (0.34% above base for term)

IveSeenTheLight

rockrat wrote: »

would you guys agree? should i just pay it off.

details.
loan @ 5.9% - £243 a month
new mortgage @ 6.09% (0.34% above base for term)

I take it 6.09% is your offset account rate.
In which case you are better off leaving the loan where it is and make the monthly payments as it is a lower interest rate

If you pay it off from your offset account, there is a chance you will not pay the money back into your offset account within the 12 months meaning you will end up paying even more interest.

17Dave

If you are struggling to meet your commitments then how about this:

Pay of the car loan from the offset and then pay £122 per month back for 2 years. You pick the figure - maybe £0 in December to pay for xmas - you now have control rather than being committed to £243 per month - as long as you do pay it back this can work.

OK so its a slightly higher interest rate but if this solution reduces financial stress why not use it.