Keep my premium bonds or offset?

Kavanne

I will soon have a £68500 mortgage. I have £25000 in premium bonds.. question is... do I keep my prem bonds in the silly hope I will one day win on them or pay £99 to activate offsetting on my standard life mortgage?!

I will definitely be withdrawing £5000 from the premium bonds which takes me under the 24000 to 1 odds so I imagine I will start winning less often, so surely it does make more sense to offset, right?

I think I just need affirmation here I know a lot of people on MSE are anti premium bonds!

poppy10_2

Deffo dump the bonds, you'd save a lot more money by paying the sum off your mortgage.

Have you put the figures into Martin's odds calculator?

http://www.moneysavingexpert.com/savings/premium-bonds-calculator/

Jonbvn

Assuming you have filled up your cash ISA for this year, I would suggest you dump the PB's ASAP. They area poor vehicle for savings.

BTW, we are not anti-PB's, we are pro good saving products!

mark13

You have to pay to offset your mortgage ? Is that a one off admin fee ?

Whilst the logical thing to do would be to pay off the mortgage, I'd keep the premium bonds as a little nest egg. You never know, it could be YOU .

I have both, and offset style mortgage ( Virginone) and premium bonds and I live in hope !!

Good luck.

Martinslovechild

Statistically, there's no comparison - the offset wins hands down.

Average earnings on premium bonds are somewhere around the 3.5% mark whereas offsetting on your mortgage will net you notional returns at somewhere around 6.56% for basic-rate taxpayers and 8.75% for higher-rate taxpayers (assuming a mortgage with a rate of 5.25% - the returns will be even greater if the mortgage interest rate is more than this).

Kavanne

Yeah I think my mortgage interest rate is around 6.5%...

Which means I will be offsetting with about... 20,000 on my 68000 mortgage. I will probably put more into my offset pot (ie: I've just started a job with performance related bonuses of up to £6000 a year, so into the pot they shall go!). I would put it into the mortgage itself but I do need it available in case the roof falls down.

Yeah the £99 is a one of fee to activate offsetting

Malski

In the last 3 months I've won £100 & £50 on the Premium Bonds, but overall I win on average £250 a year. I only use Premium Bonds to put my Corporation Tax in until its needed about 9 months later.

I would ditch the Premium Bonds and go for offsetting.