Looking for an offset loan

loanranger_4

Hi All

I'm looking for an loan I can offset with my savings. Have talked to if.com who have stopped doing the product in the last month due to customer feedback (of course nobody asked me !).

I am not looking for a CAM (current account mortgage) product as my mortgage is staying where it is. Any pointers welcome.

Many Thanks

Zahoor

Rafter

Why not do a DIY version?

Simply work out what your loan payments would be and 'borrow' from your savings ensuring you 'pay back' the equivalent loan amount to savings each month by standing order to ensure you build your savings back up again.

You are likely to get a better 'rate' from yourself than any offset arrangement.

I think Woolwich open plan has an arrangement like this but not sure whether you can roll in a loan product without a mortgage too.

R.

loanranger_4

Thanks Rafter

I think this is an excellent idea. However it will require an iron discipline to 'pay back' the amount each and every month to yourself. Having the framework of a loan contract ensures that you make these payments as the consequences for not paying it result in damage to your relationship with the bank and your credit rating.

I also thought of putting this on an if.com credit card but this has also been stopped. So it is probably going to back to the juggling the amount on a 0% Credit card ( and not just pay the minimum amount !).

Rafter

No problem.

I use a standing order to give me that discipline! If you actively have to cancel an instruction to pay something, that increases the 'guilt' factor.

I'm not a big fan of maintaining savings and loan balances at the same time, although I do have an offset mortgage to keep all my borrowings at one low rate.

I'd rather use Martins alternative of keeping a credit card with a reasonable limit as my 'emergency fund' and then keeping my debts to a minimum by paying those off before saving as such.

I still make pension contributions though and make contributions to an employee share scheme. The tax efficiency and employer contributions in both cases make this worthwhile.

You will be amazed about how even a few percentage points difference between your saving and borrowing rate can make you debt free much faster if you settle debts and then are strict with yourself about 'saving' the amount of debt repayment you are no longer making, or use that 'saving' to pay off the remaining debt even faster.

Understand your concern though. It has taken me months to persuade a friend not to take out a car loan as 12% APR when she has sufficient savings earning 4% after tax elsewhere.

Good luck.

R.