help-stooze pot into mortgage gave poor return - why?

wallet_2

I have a mortgage with nationwide . 5 yr tracker 4.74% in two parts £18k and £32k. house worth approx £200k

Quick question – is my logic correct that 5 yr tracker is cheaper cos the setup fee is spread over 5 yrs rather than 2.

Big question though surrounds issue of £17k stooze money.

2 options
a) store money in cash isa or
b) temp overpay onto mortgage

I estimate that £17k in good cash isa will return £637 in 9 months BUT alternative 2 is to overpay into mortgage. I did this but had no fee cos it was start of remortgage. But over the 9 month period it has only gained me £410 !

I ensured that my repayments to the mortgage were the same , less of course the repayments to the 0% cards. Those monthly payments to the cards were then effectively ploughed back to the mortgage at the end of the 9 month deal.( £500 )

I chose to overpay rather than isa cos of tax credit seeing interest as income but when on mortgage it is legitimately hidden.

BUT WHY has the mortgage method of stoozing so poor

Would I have had better result by putting it on the larger £32k product

Voyager2002

The benefit from 'stoozing' is the mortgage interest saved, effectively a return of 4.74 per cent on the 17,000 for nine months. Some cash ISAs offer a higher interest rate than this, however you can only invest 3,000 in any tax year and the income from interest would have affected the tax credit position. So the OP did the best thing possible with his stooze pot (unless s/he is paying a higher rate of interest on other debts, which sounds unlikely).

wallet_2

doesnt this mean i should have gained £604 though?
( ( £17000 x 4.74% ) / 12 ) x 9 = £604

virgin_moneysaver

Voyager2002 wrote:

The benefit from 'stoozing' is the mortgage interest saved, effectively a return of 4.74 per cent on the 17,000 for nine months. Some cash ISAs offer a higher interest rate than this, however you can only invest 3,000 in any tax year and the income from interest would have affected the tax credit position. So the OP did the best thing possible with his stooze pot (unless s/he is paying a higher rate of interest on other debts, which sounds unlikely).

what is 'stoozing' exactly?

wallet_2

get a special credit card with hopefully massive credit limit £6000 or whatever. Get that money into your bank account then bounce it into a high interest savings account and earn interest.Then repay your £6000 back to the card and walk away counting your interest!!!

thats the basic principle that can and do frequently get taken much further

virgin_moneysaver

ceeebeee wrote:

get a special credit card with hopefully massive credit limit £6000 or whatever. Get that money into your bank account then bounce it into a high interest savings account and earn interest.Then repay your £6000 back to the card and walk away counting your interest!!!

thats the basic principle that can and do frequently get taken much further

more or less the same as a SBT then