Tecchie advice required. Offset, even with no savings?

mattandbimpy

Hi.

This appears to be a great forum of advice and info, yet having read A LOT, I'd still appreciate some advice specific to my situation (if you please!)

I'll try and keep it simple but please excuse me if I go a little stray in the explanations (I'm a self employed photographer, not a writer and thus words aren't my forte).

I have 2 fixed rate mortgages at present, both with Nationwide. A 'main' mortgage & 'mini' mortgage (as I call it) which was taken out for home improvements.
Main mortgage = approx £98.7k @ 4.09 fixed until Aug 2008 (the time i'd like to revise my overall mortgage plan)
Mini mortgage = approx £14.8k @ 5.44 fixed until May 2012
Both can have the term changed at any time, and both have early redemption fees. I'd like to think I could cleverly avoid these if I needed to by changing the term and paying the mini mortgage off before Aug 08 to start my new mortgage plan at a suitable time.

I'm keen to get an offset mortgage as I believe it would suit my situation well (being self employed with wildly shifting cash flow). I shoot weddings so have highs of £10k sales in one month (summer) compared to £3k in the quiet months. I also understand I can save/keep my tax & NI and use this therefore to offset until I need to be pay the Inland Revenue.

My main goal is to pay off my mortgage FAST. 4 years or less. No real reason other than I feel it's possible and dislike debt. It'll also free us up before I hit 36 to consider other options in life. I have no other debt nor any savings - i.e. i'm money neutral with the exception of my mortgage. My wife also works and we jointly bring home approx £4.5k a month. I'm looking to therefore pay around £2k+ ea month on payments which should clear this in the time suggested. I have payment calculators that show this is possible so it's not the question, more a statement for setting the scene. We also have shares which are a separate story, but these do act as a small savings fund or option to put into an ISA for example each year.

Where I'm getting stuck is whether to put money into cash ISA's or just the mortgage. I've read Intelligent Finance offer the facility to offset ISA's but their APR's are high compared with the likes of First Direct, so I'm unsure of the savings benefit will outweigh the extra APR. I value good customer service and prefer to stick to a sound plan, rather than juggle lots of plates just to achieve small gains. This is why First Direct appeal to me. They however don't allow ISA offsetting - doh!

So, to surmise, is offsetting the right option for me, and should I put funds into ISA's or just max out on mortgage payments? Is there a suitable option to offset & have ISA's that I'm missing?

Your help would be much appreciated.

Matt

Hobo_2

Hi Matt,
Only other lender are Barclays who also offer a tracker with cash ISA offset feature.

Offset could work for you maybe, @ that schedule you have for saving.

Indeed would be a pity not to take advantage of your onetime ISA yearly allowances for future Tax free income, beyond your mortgage being paid.

IF/Barclays, would give you the option to have ISA/offset with the same funds

Save beyond the 4yrs , then move ISA`s out of the offset, pay mortgage off.

Doing this myself actually, but have funds to offset @ start, so will keep ISA`s outside of offset ( as long as they beat/match mtg interest rate)
to accrue interest within ISA wrapper.

sort of trying to, "have your cake & eat it"

As you say there`s always a compromise, best APR/customer service/suitable product