Flexible Mortgage

tonytsdiver

Hi. I'm new to the forum so I hope I have posted in the correct section.
A friend has a Flexible Mortgage (interest only) that allows her to pay an amount into a linked account to offset the mortgage interest charged each month.
Let's say that she has a £50 k mortgage and is able to deposit a £ 50 k lump sum into this linked account thus reducing her monthly mortgage payment to zero. This lump sum payment now sits along side the mortgage and can be tapped into sometime in the future if required.
My question is, Is this a better move than depositing the £ 50 k lump sum into the best savings account at the moment. Presumably no interest earned on her lump sum when offsetting means no tax to declare on it? Thanks. Tony.

silvercar

Presumably no interest earned on her lump sum when offsetting means no tax to declare on it?

Exactly. So it works if you can not get a better net rate ie after tax. You may find that you can get a better rate on an ISA or similar as they are tax free, but I doubt you can get a better rate on a lump sum of 50k. Depends how much time and effort you want to spend juggling money around between accounts to get the best rates. Remember to allow for time the money is between deals if you are constantly moving bits around.