Do I have my Mortgage where I want it?

bfayle

Guys I'm in a very fortunate position in having a lump sum in my savings account that is equal to my outstanding mortgage. The wife tells me I should redeem the mortgage debt in full. Whilst I agree, I'm reluctant to bid farewell to this sizeable sum. I'm considering an off-set in an attempt to effectively establish a credit line to be drawn on as and when penalty free. Is that the most sensible of approaches or do I simply get rid of the money?

Jonbvn

It depends on several factors:

1. What is mtg interest rate?
2. Could you get a better rate in an ISA or other savings? Note the rate must be net of tax.
3. Will you need the funds in future for a large purchase (e.g. home improvements, car(s), retirement/pensions).

Overall, I think offsetting would probably offer you the most flexibility.

BTW, I assume you have seen the MSE article on this subject?

setmefree2

You should have a look a close look at the rates on offset a/cs. I'm not sure they are competitive at the moment. I have seen many people complaining on MSE that the rates have increased along with the SVR and not decreased with falls in the BOE rate. Look on the mortgage board - there is a long thread full of complaints about increasing interest rates on the one account.
So, what is your mortgage rate currently? What rate are you getting on your savings? What rate is the offset you are considering?

All the Best

SMF2

getmore4less

setmefree2 wrote: »

You should have a look a close look at the rates on offset a/cs. I'm not sure they are competitive at the moment. I have seen many people complaining on MSE that the rates have increased along with the SVR and not decreased with falls in the BOE rate. Look on the mortgage board - there is a long thread full of complaints about increasing interest rates on the one account.
So, what is your mortgage rate currently? What rate are you getting on your savings? What rate is the offset you are considering?

All the Best

SMF2

Thats because the OneAccount is not very good and never has been

Get an offset tracker with more features and flexability.

Anyway to the OP,

Having a line of easy money is usefull.

Also there are a lot of saving account that pay more after tax than the mortgage rate these days, usually regular savers, and an offset is a great way to feed these.
Also some offsets allow you to offset ISA so you can build these up using the offset as a cash flow buffer.

Great way to manage the money.

If you ever plan to move keeping the current loan(make sure it is portable) by passes any future credit crunch issues as well.

Paying off the mortgage is not the way to go these days, when there are free(after fees) options that give loads of flexability.

As someone pointed out elswhere having a charge over your property also reduces the risk of fraud.