Where to next on an Offset Mortgage

red_debs

I have been using funds to offset against my mortgage and have enjoyed the benefit of a next to nothing interest charge each month. The time has now come that the amount of savings I have offset is greater than the mortgage owing and I am wondering what to do next as the building society will not pay me interest.

Has anyone been in this boat and found a good alternative?

red_debs

gjchester

I've an offset with the woolwich and they will allow me savings pots that can either ofset the mortgage or pay interest.

Have you taked to the bank? they may do the same, if not just set up a standing order to sweep roughly the amount you have in excess each month to a high interest account account and if you need any extra you can push it back from the high interest account easily.

The advantage of the standing order is two fold, one you can vary it easily as the amount you ofset increases and you want to hold less in the current account, but also if you set it up you will probably forget about it so more likely to save it as you have to make a concious effort to sweep it back.

If you just want to move a smallish but variable accout each month just use internet banking and set the high interest account as a payee, and sweep it yourself over, the draw back is it's manaula and your less likely to do it..

red_debs

I take your point my concern is that by ofsetting I am actually getting a good interest rate as it is the same as the mortgage rate of 5.99%. I cannot find an alternative to sweep it into that pays anything like this taking into account tax etc.

Is anyone aware of an equivalent savings rate?

budgetflyer

I may be missing something here,please explain otherwise. If your savings are greater than the mortgage then they cancel each other out. Why not just pay the mortgage off and then all you have to worry about is what to do with the surplus. I dont think you will be getting 5.99% on the surplus. I assume thats your mortgage rate.The surplus is probably at NADA or pitifull at best.

dwsjarcmcd

You can't earn interest in an offset account, the equivalent of interest goes to 'offset' your mortgage payment. If you were paid interest, it would be taxed at your highest rate. This applies where the capital exceeds the debt, its not your lender's fault, it is revenue rules. You can either pay off your mortgage and invest the money in something e.g. ISA for the tax benefits, or just withdraw your excess capital anfd invest it.

Joe_Bloggs

@red_debs you have acheived what many offset mortgage holders could only dream of. You are now in a stalemate position with your lender. Their SVR rate no longer hurts you .You could probably negotiate better interest deal with them that might make alternative investments more attractive. I got 0.5% off by asking for a redemption statement. With savings you are taxed on the interest according to your income. You could transfer savings accounts to a non/lower rate tax payer to get a better. There are tax free ISA allowances to consider.
J_B.