[iceleliewBync]

Put the whole thing on indefinite hold for the time being as my work is mental at the moment, and might cause a shift in my circumstances depending on the outcome of tenders in progress.

Not sure exactly what I will do once my situation becomes clearer. I do want to make my savings work harder for me, but just not sure how.

Unless I'm being really dumb, a high interest savings account will return up to 10% with the figures you are quoting.

[Patamuta]

In a low interest environment, the easiest, no thought required thing to do is get an offset mortgage (assuming rates are not higher than "normal" mortgages, you're due to remortgage and the fees aren't prohibitive). The effective rates gained on your savings are the mortgage rate x (1+ plus your marginal tax rate). You're holding cash so the risk is low too.

Then when you have time to think about it properly or assess your risk level, you take the cash and treat the mortgage like a normal one.

[Keyblctt]

Unless I'm being really dumb, a high interest savings account will return up to 10% with the figures you are quoting.

4.5% is about the best I can find at the moment. These days banks don't want to give you any kind of interest at all.

My thinking at the moment is simply to use some of our savings to pay off a chunk of the mortgage, as bank account interest rates are barely higher than our blended mortgage rate (we have 50% of the mortgage on a fixed rate, and 50% on variable).

[NaMbessemab]

4.5% is about the best I can find at the moment. These days banks don't want to give you any kind of interest at all.

I have 20k in a 5 Year CD and I'm barely getting 2%.

[Rjvpicux]

you should always state the currency as well when talking about interest rates

[EnubreBense]

In a low interest environment, the easiest, no thought required thing to do is get an offset mortgage (assuming rates are not higher than "normal" mortgages, you're due to remortgage and the fees aren't prohibitive). The effective rates gained on your savings are the mortgage rate x (1+ plus your marginal tax rate). You're holding cash so the risk is low too.

Then when you have time to think about it properly or assess your risk level, you take the cash and treat the mortgage like a normal one.

While you are correct in theory (a Firstdirect example showed you needed to have at least ~7% return to beat the benefits of ofsetting if you're a high tax-rate payer), don't forget that you probably have no protection on that cash you pay in to offset the debt. If the bank goes belly up, you most likely will have to pay back the mortgage while losing the cash you had put on the offset account... [nb: I have not double checked this but thought about it the other day - it's quite a scary scenario].

Other options that are quite interesting at the moment are high dividend yielding stocks. With cash and bond yield so low, investors are suddenly seeing high-yielding equities as an interesting vehicle at the moment.

[Patamuta]

Only the surplus over FSCS limits is used to reduce mortgage debt. I have a fully offset mortgage for exactly the limit to keep the readies available at low opportunity cost, so would essentially lose whatever is in my current accounts to the debt itself.

[EnubreBense]

Only the surplus over FSCS limits is used to reduce mortgage debt. I have a fully offset mortgage for exactly the limit to keep the readies available at low opportunity cost, so would essentially lose whatever is in my current accounts to the debt itself.

Sorry... lost you there. You mean you are offsetting £85K (considering that's the compensation limit for deposits in the UK)?

[Patamuta]

Yes, but instead of offsetting your own money, you take out an £85k mortgage and leave the funds sat in an offsetting account (mortgage therefore attracts no payments as it is interest only). You invest your own £85k but have an £85k cash call at less than 3% pa.

If the bank goes caput, the £85k is protected and they use whatever other deposits (assuming less than £85k) you have to repay the £85k loan. You settle the difference and walk away with what's left, that being whatever was in your other deposits (ignoring any fees).

It essentially amounts to having an £85k low-interest, colateralized overdraft.