Reply to: So now it's not worth overpaying the mortgage again!

[lukemg]

Paying off the mortgage probably works well for some people but I don't care if I never pay it off. (got an offset so can take edge off without commitment)
You have to consider this against a complete picture of your finances.
I am always shocked to see people desperately paying off the mortgage only to find they have to do equity release at terrible terms later !!!
OR they end up scoffing up the entire IHT allowance and more with the house.
In terms of return, I can get 6% in dividends from SSE and an easy 4% in my sleep from a range of big non-scary shares. Anyone saving into a cash ISA or any basic account who doesn't need instant access to the cash is losing huge amounts of return over the space of a few years, seems madness to me but I do have an interest in this area.
SO - I would recommend everyone look at some equity investment for longer term stash (5 yrs min) (vanguard lifestrategy 100 would suit virtually everyone)
Pay off the expensive debt first of course and make sure you aren't paying off a 2% mortgage and missing 7% elsewhere (approx long term equity return IF you can ride the waves without panicking).
GLA

[d000hg]

Was on a residential mortgage until I moved out of UK. Santander must be spitting, they agree to convert to a let mortgage for a fixed fee some years age. 0.49% above base rate for a BTL. The yield is almost 7%.

We have almost exactly the same situation. The first house we bought after getting married (for £63k!) we got a +.7% deal I think, and they let us keep it when we changed to BTL as the interest rate was 3%-ish at the time.

[scooterscot]

Was on a residential mortgage until I moved out of UK. Santander must be spitting, they agree to convert to a let mortgage for a fixed fee some years age. 0.49% above base rate for a BTL. The yield is almost 7%.

[DaveB]

I'm still aiming to pay off the mortgage asap. On an offset with First Direct atm.

I could put the extra cash into an ISA but topping it out would be difficult now for two of us.

Two big divi's this year and next should see it paid off and the cash that free's up each month can be used for something else when interest rates are better and I dont have to worry about paying it if I end up benched for any length of time.

[d000hg]

Well, we managed to get the dizzying rate of 2% on the cash ISA whose special rate was expiring, and even that was only due to Santander offering a promotional rate for 1-2-3 customers.

I was feeling pressured to get money into ISAs before the April cut-off but now I don't think I'll bother. 3% on the 1-2-3 (taxable) savings account is better and has no penalties to take the money out. And as mentioned in another thread, I think I'm going to dabble in Zopa/ThinCats to the tune of a few grand... nothing much until I get to grips with how it works and how comfortable I feel with it.

The increased ISA levels spoil my fun really. Before, it was always a nice goal to fill both our cash ISAs each year as well as any other investment/mortgage overpayments. But £30k is more than we have to put away each year so the game is a bit meaningless now

[MarillionFan]

Did the opposite. When I moved in 2007 I had paid off my previous house and went for a much larger one, but as I had an offset decided to max out my mortgage to multiplier but keep the money in the offset.

As interest rates dropped ISAs were higher so kept maxing them out including taking out a massive bond paying 5% in the wife's name. Eventually they dropped to 0.98% for me on 425k. I moved all of the equity and subsequent savings on interest into investment property including that house build & the rest into ISA the rest into topping up pension. Income from the mortgage money which I have invested is just shy of 6%.

I have no reason to overpay or pay off my mortgage until interest rates reverse and it's no longer profitable.

If I was you and you're paying 2% is to stick the overpayments in Zopa versus an Isa (unless you want a share ISA) as even after tax you'll end up making money.

[Whorty]

Paid off our mortgage a few years ago (when I was 38) ... it is such a weight off the shoulders knowing whatever happens you will never be homeless. Just need to pay the bills now ... and buy Mrs W lots of shoes

[TykeMerc]

I'm kinda stuck with a 4% offset as well. The low rates are tempting but the ISA levels mean I can't do anything with the spare money to make it worth leaving the offset. No wonder RBS won't drop the offset %.Bastards

I'm in a similar position with a Clydesdale offset, admittedly it isn't for much (sub 25k) and my cash reserves are higher than that by a good bit, but after maxing ISA there's no real benefit to paying it direct to the mortgage.

I admit I have thought about moving to a bigger/better place with part of the motivation being to up the offset, in truth that's a bloody silly motive when I think about it

[northernladuk]

My thoughts were, since I don't have an offset mortgage, that paying it off now means the money is gone - unless I remortgage. Whereas putting the money in savings means I can use it if the need arises, or an opportunity develops, and if the rates change I can dump the money in as an overpayment (my new mortgage offers unlimited overpayments without a penalty) to avoid the pain.

Yep, I should have said I have an offset so I have that flexibility so not really an issue. Thing is do you not have to be careful to not get tied in to an ISA to get a decent rate so your money is locked in? Getting the write pair of products such as your unlimited over-payment certainly helps with flexibility.

TBH the values of money we are talking won't make much difference either way at the moment though.

[d000hg]

I'd agree with all this. It's not a numbers game messing trying to get the extra 0.5% out of it. 6 of one half a dozen of the other and the interest rate really isn't a factor anymore.

Personally I've opted to keep with the mortgage. I believe I would be in a better place with a lower mortgage when the interest rates start rising. Pay off a much as I can so pay less of the higher percentage when it hits. Might not do for years but that's the gamble... and it's not really much of a gamble as the ISA/Mortgage is so close to call you are hardly losing a lot making the wrong call right now. The money to be saved is in the longer term IMO.

My thoughts were, since I don't have an offset mortgage, that paying it off now means the money is gone - unless I remortgage. Whereas putting the money in savings means I can use it if the need arises, or an opportunity develops, and if the rates change I can dump the money in as an overpayment (my new mortgage offers unlimited overpayments without a penalty) to avoid the pain.

[northernladuk]

I'm kinda stuck with a 4% offset as well. The low rates are tempting but the ISA levels mean I can't do anything with the spare money to make it worth leaving the offset. No wonder RBS won't drop the offset %.Bastards

[northernladuk]

When we got our mortgage 2 years ago, rates were about 3-3.5% so we've been favouring mortgage overpayments over savings. But now mortgage rates have fallen to well under 2%, less than you can get on even a boring cash ISA.

In this situation is there any good argument for continuing to make overpayments or should one put all spare cash into ISAs and savings accounts, and then make a big overpayment when/if things reverse? With the 15k ISA limit and a spouse, maxing out ISAs is now a challenge and the "never take money out of an ISA" adage seems a bit less relevant.

I quite enjoyed seeing the mortgage tumble in size but doing it just for pride seems a bit daft.

I'd agree with all this. It's not a numbers game messing trying to get the extra 0.5% out of it. 6 of one half a dozen of the other and the interest rate really isn't a factor anymore.

Personally I've opted to keep with the mortgage. I believe I would be in a better place with a lower mortgage when the interest rates start rising. Pay off a much as I can so pay less of the higher percentage when it hits. Might not do for years but that's the gamble... and it's not really much of a gamble as the ISA/Mortgage is so close to call you are hardly losing a lot making the wrong call right now. The money to be saved is in the longer term IMO.

[TykeMerc]

I am in a legal battle with Santander. The written agreement was that they accepted overpayments but what they actually did was to put the overpayments into a separate holding account that did not gain interest and was not credited against the mortgage. Even worse, they later placed all payments that did not match the exact mortgage payment due in the 0% interest account neither of which I could access. Santander's argument is that I agreed to that during a telephone call. It has also come to light that they have tried the same scam on hundreds of other customers. So far Santander have failed to supply a shred of evidence under the pretext that mortgage was held on a old computer system and they can't extract all the data.

Even if you've exaggerated that a bit I'd agree with Sue Ellen it's publicity they would hate to get, take it to the press. Whatever they were thinking when they tried that on, it's just taking the piss.

[SueEllen]

I am in a legal battle with Santander. The written agreement was that they accepted overpayments but what they actually did was to put the overpayments into a separate holding account that did not gain interest and was not credited against the mortgage. Even worse, they later placed all payments that did not match the exact mortgage payment due in the 0% interest account neither of which I could access. Santander's argument is that I agreed to that during a telephone call. It has also come to light that they have tried the same scam on hundreds of other customers. So far Santander have failed to supply a shred of evidence under the pretext that mortgage was held on a old computer system and they can't extract all the data.

Have you gone public?

I'm sure financial journalists would be very interested in your story.

And companies don't like bad publicity....

[Paddy]

When we got our mortgage 2 years ago, rates were about 3-3.5% so we've been favouring mortgage overpayments over savings. But now mortgage rates have fallen to well under 2%, less than you can get on even a boring cash ISA.

In this situation is there any good argument for continuing to make overpayments or should one put all spare cash into ISAs and savings accounts, and then make a big overpayment when/if things reverse? With the 15k ISA limit and a spouse, maxing out ISAs is now a challenge and the "never take money out of an ISA" adage seems a bit less relevant.

I quite enjoyed seeing the mortgage tumble in size but doing it just for pride seems a bit daft.

I am in a legal battle with Santander. The written agreement was that they accepted overpayments but what they actually did was to put the overpayments into a separate holding account that did not gain interest and was not credited against the mortgage. Even worse, they later placed all payments that did not match the exact mortgage payment due in the 0% interest account neither of which I could access. Santander's argument is that I agreed to that during a telephone call. It has also come to light that they have tried the same scam on hundreds of other customers. So far Santander have failed to supply a shred of evidence under the pretext that mortgage was held on a old computer system and they can't extract all the data.