Pay Mortgage Off or Invest?

george4064

rothers said:

Millyonare said:

Offset mortgage.

If I put more into the offset account than my mortgage balance would I earn interest on the surplus?

No you wouldn't, you don't earn interest as such with an offset mortgage. It just reduces or eliminates the monthly interest you pay on the mortgage balance.

In other words, offset mortgages reduce or eliminate your interest liable it doesn't earn you any interest.

There maybe a handful of providers that do pay interest on the surplus, but I'm pretty sure it's as I've described above.

rothers

george4064 said:

rothers said:

Millyonare said:

Offset mortgage.

If I put more into the offset account than my mortgage balance would I earn interest on the surplus?

No you wouldn't, you don't earn interest as such with an offset mortgage. It just reduces or eliminates the monthly interest you pay on the mortgage balance.

In other words, offset mortgages reduce or eliminate your interest liable it doesn't earn you any interest.

There maybe a handful of providers that do pay interest on the surplus, but I'm pretty sure it's as I've described above.

So I would be better off paying my mortgage off rather than pay a fee to change mortgage to an offset to reduce the interest payments to zero via the offset?

Albermarle

Offset the 10 year fix with a decent fixed rate saver once I can get at least 5%+ for 5 years.

It is possible that when savings rates peak, that the providers will take a view that from then on they will decline. At that point 5 year rates could well be less than one year rates, so timing is important. Probably best to fix a 5 year rate whilst shorter term rates are still increasing rather than wait for the peak. Just a thought.

Type_45

It's no guarantee that the BoE interest rate will keep rising.  You may end up paying off the mortgage only to find the BoE rate comes down again shortly after. 

Type_45

And there's another thing to consider too:

Just as high inflation would reduce the value of £90,000 in a savings account, it also reduces the value of a £90,000 mortgage. 

MX5huggy

And just like that @rothers there’s a product launched just for you paying 0.85% over BoE rate for 2 years so you can make 0.68% (0.85-0.17) or £612 per year on £90k 

https://www.moneysavingexpert.com/news/2022/09/family-bs-base-rate/?_ga=2.153539131.2074471686.1662292210-1967341280.1609525200&_gl=1*265mm0*_ga*MTk2NzM0MTI4MC4xNjA5NTI1MjAw*_ga_X74CWQS9F0*MTY2NDQzNjM2MS4xNzMuMS4xNjY0NDQ1NTU4LjE3LjAuMA..

rothers

MX5huggy said:

And just like that @rothers there’s a product launched just for you paying 0.85% over BoE rate for 2 years so you can make 0.68% (0.85-0.17) or £612 per year on £90k 

https://www.moneysavingexpert.com/news/2022/09/family-bs-base-rate/?_ga=2.153539131.2074471686.1662292210-1967341280.1609525200&_gl=1*265mm0*_ga*MTk2NzM0MTI4MC4xNjA5NTI1MjAw*_ga_X74CWQS9F0*MTY2NDQzNjM2MS4xNzMuMS4xNjY0NDQ1NTU4LjE3LjAuMA..

That sounds perfect! Thank you, I’ll have a look at it!