£250k 'Savings Pot' - What's Best To Do With It ?
Discussion
I have an offset mortgage (ie I have a £250k mortgage with all of that £250k currently in a mirrored savings account so I effectively have no mortgage and no savings)
I'm happy that I am in a very 'safe' situation but I'm wondering if there aren't better things to be doing with the money, should I use it, its costing me 1% over base.
So (other than drugs, hookers and fast cars) what would you do ?
I have a background in property and cars but still feel both are liable to drop further.
Cheers
I'm happy that I am in a very 'safe' situation but I'm wondering if there aren't better things to be doing with the money, should I use it, its costing me 1% over base.
So (other than drugs, hookers and fast cars) what would you do ?
I have a background in property and cars but still feel both are liable to drop further.
Cheers
Depends on timescale and how much risk you're prepared to take.
If its currently offsetting @ 1% over base thats an effective rate of 2.5% if you're higher rate tax payer with the advantage of being 100% secure if lender/bank fails...
Any other option involves time and risk and level of expertise (and your affordability to service a base + 1% mortgage in x years time if you're not 'offsetting').
If you invest I would spread the risk and use a professional (more than happy to point you in the right direction
). There is plenty of money to be made in the investment markets irrespective of which way the markets go 
.
Alternatively gear up and grab a property bargain in the next year or so (again, timescale dependent).
Feel free to PM me if you want to talk through any ideas further.
Paul.
If its currently offsetting @ 1% over base thats an effective rate of 2.5% if you're higher rate tax payer with the advantage of being 100% secure if lender/bank fails...
Any other option involves time and risk and level of expertise (and your affordability to service a base + 1% mortgage in x years time if you're not 'offsetting').
If you invest I would spread the risk and use a professional (more than happy to point you in the right direction
). There is plenty of money to be made in the investment markets irrespective of which way the markets go .Alternatively gear up and grab a property bargain in the next year or so (again, timescale dependent).
Feel free to PM me if you want to talk through any ideas further.
Paul.
Simpo Two said:
I don't understand these things. It seems like they've got £250K of your money and are charging you to borrow it?
Nope, he has a £250k borrowing facility, and they [bank] are charging for the amount used i.e. currently £0. Basically, it's a £250k overdraft limit. Apologies, if it's ruined some conspiracy theory along the lines of 'dem banks are all evil and charging us for everyfink...'redgriff500 said:
So (other than drugs, hookers and fast cars) what would you do ?
Do nothing? So basically, as it stands, you own your house outright [minus some 'sealing fees' if you were to redeem the mortgage]. I was actually in this position before (i sold my house) and was quite content that i owed jack to anyone. However being prudent, i did reduce the facility to £50k!Edited by fido on Friday 10th April 16:01
Stevenj214 said:
pjac67 said:
with the advantage of being 100% secure if lender/bank fails...
Excuse my ignorance, but if the bank fails - wouldn't only £50k be 100% secure, whilst the mortgage would likely be bought over and remain at £250k?Ah OK, I didn't realise that a 'mirrored savings account' is not a savings account with £250K in it, but an overdraft facility of £250K...
Being a simple pragmatist, the interest you pay to borrow money is generally more than you'll get from saving it, so you could borrow £250K to pay off the mortgage, then - er, hang on lads, I've got an idea...
Being a simple pragmatist, the interest you pay to borrow money is generally more than you'll get from saving it, so you could borrow £250K to pay off the mortgage, then - er, hang on lads, I've got an idea...
I am in the same boat in that I still have the £88K I can draw down should I wish but the account is just in credit. I keep a bit of savings in higher (not high!) interest acounts. I keep it that way simply in case I need the money at a time when credit is tight (like now).
What you need is something that will guarantee you at least 1% above the base rate with low risk? Had your crystal ball been working at full throttle, you could have taken out a 3 or 5 year bond when interest rates were 6.75% and sat back and waited for the rates to fall. I had/have neither the insight nor the guts!
I am currently thinking about buying some nice period furniture or a mint XK I can look after and enjoy for 5 or 10 years in the hope that I won't lose as much as I would if I bought modern/new. That sadly is the extent of my ability to keep ahead of the markets!
What you need is something that will guarantee you at least 1% above the base rate with low risk? Had your crystal ball been working at full throttle, you could have taken out a 3 or 5 year bond when interest rates were 6.75% and sat back and waited for the rates to fall. I had/have neither the insight nor the guts!
I am currently thinking about buying some nice period furniture or a mint XK I can look after and enjoy for 5 or 10 years in the hope that I won't lose as much as I would if I bought modern/new. That sadly is the extent of my ability to keep ahead of the markets!
Edited by Brown and Boris on Sunday 12th April 10:10
pjac67 said:
Stevenj214 said:
pjac67 said:
with the advantage of being 100% secure if lender/bank fails...
Excuse my ignorance, but if the bank fails - wouldn't only £50k be 100% secure, whilst the mortgage would likely be bought over and remain at £250k?Reading the T&C's my interpretation is that there is no right of set-off between the accounts. Thus if the bank goes belly up only GBP50k of your savings is protected, the rest is lost and you still have the mortgage liability from the other account. My interpretation of the documentation could be wrong but it will be well worth reading your documentation very carefully to determine if you have a right of offset in case the worst happens.
Chris
Chris
I asked the question when all the stuff hit the fan a while ago.
I was told that the industry standard is that your assets are used to pay your debts and the final balance is what is or isn't protected.
IE in my case final balance = nil.
I know I ought to get that in writing from the lender though.
I was told that the industry standard is that your assets are used to pay your debts and the final balance is what is or isn't protected.
IE in my case final balance = nil.
I know I ought to get that in writing from the lender though.
redgriff500 said:
I asked the question when all the stuff hit the fan a while ago.
I was told that the industry standard is that your assets are used to pay your debts and the final balance is what is or isn't protected.
IE in my case final balance = nil.
I know I ought to get that in writing from the lender though.
The principle of set off should apply. I was told that the industry standard is that your assets are used to pay your debts and the final balance is what is or isn't protected.
IE in my case final balance = nil.
I know I ought to get that in writing from the lender though.
fscs site said:
What happens if I owe money to a bank, building society or credit union that fails?
Amounts owed to the failed firm (for example, loans, mortgage or credit card debts) are taken into account before any compensation is paid.
If you are a borrower with the same firm this may affect the amount you can claim, as the amount of your deposits may be 'set-off' against any amounts you owe.
If a firm were to fail, FSCS would consider a depositor's overall net claim, which would include taking into account any amount owed which the firm may set off.
In the event that set off is applied, and if the borrowings exceeded the depositor's savings, there would be no overall claim against the failed firm, and the depositor would not be entitled to any compensation.
For example, if a depositor had a mortgage of £200,000 and savings of £150,000 with the same bank, set off may be applied by the Insolvency Practitioner dealing with the bank failure. As a result, the depositor may end up owing the bank £50,000, so there would be no positive balance and no claim for compensation.
Amounts owed to the failed firm (for example, loans, mortgage or credit card debts) are taken into account before any compensation is paid.
If you are a borrower with the same firm this may affect the amount you can claim, as the amount of your deposits may be 'set-off' against any amounts you owe.
If a firm were to fail, FSCS would consider a depositor's overall net claim, which would include taking into account any amount owed which the firm may set off.
In the event that set off is applied, and if the borrowings exceeded the depositor's savings, there would be no overall claim against the failed firm, and the depositor would not be entitled to any compensation.
For example, if a depositor had a mortgage of £200,000 and savings of £150,000 with the same bank, set off may be applied by the Insolvency Practitioner dealing with the bank failure. As a result, the depositor may end up owing the bank £50,000, so there would be no positive balance and no claim for compensation.
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