Reply to: War Chest.

[Old Greg]

WTS - offset.

Also worth considering a fixed rate and then if interest rates go up, it may be worthwhile taking it out of the offset and putting into a higher (even with tax taken into account) rate savings account.

[TheFaQQer]

Good idea as long as you can whip it out again if you need it...

It's just like having a £500k overdraft. There's no downsides to it.

Apart from the obvious downsides of spending the money, having no repayment plan, and relying on a housing boom to increase the value of your house enough to pay it off, but still leave you with enough to find somewhere else to live when you have to repay the mortgage.

[jmo21]

Beaten by a knob... the shame

lol!
nano-seconds, I'm sure of it!!

[northernladuk]

Are you thinking of overpaying your mortgage?

You don't need to overpay your mortgage monthly payment to benefit from offsetting.

Beaten by a knob... the shame

[jmo21]

Good idea as long as you can whip it out again if you need it...

Are you thinking of overpaying your mortgage?

You don't need to overpay your mortgage monthly payment to benefit from offsetting.

[northernladuk]

Good idea as long as you can whip it out again if you need it...

You don't put it in anywhere. You link a bank account to your mortgage and any money in that account is offset against the mortgage... hence the name.... You can access the money in the account just as you would normally. It just doesn't get any interest.

If you put it in to the mortgage it is an overpayment, not an offset.

[Jog On]

My strategy for this is to put a lump 3 months living and business expenses (insurance, accountant etc) in a savings account with my corp tax. Then each month keep aside a small % to top it up until it get's up to 12 months worth then probably stop

Got it in a Santander business savings account with monthly interest, adds up when it's sat there with corp tax...

[psychocandy]

Offset mortgage account... simples

Good idea as long as you can whip it out again if you need it...

[northernladuk]

This.

Although I'm not sure what happens if you pay off the mortgage and then still need to borrow against the account. Probably need to ask the bank that, as I'm getting to the point where my yearly dividend will pay the mortgage off completely, but I'll need more later in the year.

You don't pay it off, the offset just reduces the interest. I thought if you had 100K mortgage with 120K in an offset account you would just pay zero interest on your set monthly payments until you have paid it off. Your monthly payments will ALL go to paying off capital if your offset is greater than your mortgage. If you want to put the lump sum in and actually pay the bank it (not in the offset account) the mortgage would be considered paid off. You are only offsetting against the interest... or so I thought. Happy to be told otherwise though.

TBH I never intended to keep mine as long as this and expected to either pay it off with a lump sum or get a better deal in a couple of years so hadn't given it much thought.

[TheFaQQer]

Offset mortgage account... simples

This.

Although I'm not sure what happens if you pay off the mortgage and then still need to borrow against the account. Probably need to ask the bank that, as I'm getting to the point where my yearly dividend will pay the mortgage off completely, but I'll need more later in the year.

[Dark Black]

Hmmm. Only trouble with this whereas its nice to pay off the mortgage rather than having it sit in a crap interest account once its gone on the mortgage its gone.

No good having paid £50K off the mortgage to find out in three months you're warchest is all gone.

I'd say 3 months is cutting it a bit fine. Admitedly, its a balancing act between paying off debts and keeping some readily available.

Offset mortgage account... simples

[psychocandy]

I ca do abut three months on the bench, the rest is in my pension and paying off the mortgage,

Hmmm. Only trouble with this whereas its nice to pay off the mortgage rather than having it sit in a crap interest account once its gone on the mortgage its gone.

No good having paid £50K off the mortgage to find out in three months you're warchest is all gone.

I'd say 3 months is cutting it a bit fine. Admitedly, its a balancing act between paying off debts and keeping some readily available.

[MarillionFan]

What would generate that passive income?

I use the stock market myself.

Shares / Divvies
Bonds
ISAs
Buy to Lets
Zopa
Ratesetter
Funding Circle
Credit Card Schmoozing

[BlasterBates]

Sock market is up and down but gives you a better return.

[eek]

What would generate that passive income?

I use the stock market myself.

Rather a risky option. Shares go up and down in value, dividends aren't guaranteed.

At least with property you can be reasonably sure about getting a monthly income.