Japhy Rider

And the whole of the gulf region - Not just Dubai.

Please don't take this the wrong way, but if you search the HPC archives there are about a zillion long and tortured discussions on this topic. There is no quick answer, because it's difficult to even agree on what the question is. I have personally changed my view on this topic more than once. Here's a link which may help to get you thinking about what the real questions are. Discuss economics Not saying it has the answer but it's a start. JR

Actually, that's not necessarily true. In Dubai it is normal that you are required to pay 1 or 2 years rent in advance. There really isn't much option. The rent is payed up front in the form of cheques wich are then cashed periodically. It used to be that companies wrote the cheque and deducted the rent from your salary, but in the last few years many companies have forced thier staff to take over these liabilities. If you get kicked out of your job after 3 months you're in shit street. As soon as you don't have enough money in the bank, the cheque bounces and you're in jail. You'd be crazy not to do a runner. Now, leaving the wife and kids is a different matter. That's pretty low. JR

I agree (sort of) anything that keeps some control over your money is good.

I'm not sure there is much arbitrage oportunity here. There are a few people whose mortgage rates are tracking the MPC rates. for them there is a theoretical benefit, but if your real rate is low then I would say keep the money if you can. do the sums for a 0.5% or 1.0% difference in your repayments (if you have the option). cash is king! but don't ever default!

I must confess that I didn't read it. It all seems so simple to me... and I don't really like bananas. Now pineapples we could talk about. JR

I would agree (and I do in a way), except that offset accounts are necessarily with the same institution as your mortgage lender. Try telling them that you can't afford your mortgage payment one month. See what they say. JR

Sorry, sarcasm breakdown. reset in progress. edited for pissedness

Morons. why exactly? somebody fetch a calculator for this man. I reference you to post 41. It's a realy simple question.

I'm really weirded out by this thread. I'd have thought that most of the posters here realize the power that savings give you over that of loan repayments. I would go as far as to say that I would happily suck up a o,5 to 1.0% deficit in my saving rate in order to maintain control over my cash. repayments you have made against a loan will never be in your control ever again.

And the answer to my question?

i have a tracker mortgage at 0.5% above base rate. It's a repayment mortgage with conditions so I don't have the option to do what the OP is suggesting. But where did anyone suggest that these kind of mortgages were currently available? please keep the name calling to yourself.

All I did was pose a simple question. If you read the thread you will understand why. I'll do you a deal. If you choose to read the link below and respond to it then you also have to answer my conundrum in post 41. Fair do's? Cash ISA

If you have an IO mortgage you can do it right now and for as long as you want. In fact if you have an IO mortgage you should be doing it already, whether you mean to or not.

you don't need to. You only need to save what you would have paid in capital repayments. I don't know much about isas because I don't live in the uK any more, but I understand you can put in up to about 3,500 a year which is more than the capital repayments would be on many mortgages.

I agree. An easy way to visualize this is that for every pound you owe you will pay five pence a year until you pay it back Every pound you save you will be paid five pence (or six in my example). The reason that this is particularly sensible at the moment is that you build up a "war chest" of savings which can be used for emergencies (provided you have the necessary self discipline not to spend it on a boat).

It matters just as much then as any other time... Well more actually.

I think the OP was really just trying to raise an interesting recent phenomenon whereby the interest rate on some tracker mortgages is actually less than the rate paid on some relatively safe investments. here's a purely academic question: You have a loan which is completely flexible and on which you pay an annual interest rate of 5% In the market there is a savings vehicle which pays an annual interest rate of 6% Which is the better choice? A. Repay capital on the loan B. Repay only interest and put any capital repayments you would have made into the savings scheme

But what he is describing is what every person who takes out an interest only mortgage commits to do. If the savings vehicle makes a worse return than the interest on the mortgage then you lose. If it makes more then you win. It's just an endowment really, without buying shares.

Not that impressed by Yahoo's performance to be honest. but I friggin love them Google graphs. /Google wins

Not quite. What he did was to express the future value of the investment (£2,052 per year for 30 years @ 6% per anum ) as a cost of £108k when in fact the cost is around £62k. As well as saying some fairly unkind things about the original poster - Who was actually quite right.

I dunno. Some people just don't want the work these days.

Interesting that the minimum cost of a holiday is $8,000. I must phone the B&B I just booked to make sure they didn't leave a zero off of the invoice. /booked a Bed and Breakfast - not a Bradford and Bingley. //Bradford and Bingley might have been cheaper.

Oh dear God, are you serious? When the F**K has a boat ever been an investment - unless it's hauling coal from Newcastle or tea from China. Idiots. JR

I think you need to check your maths there ?...! You have use the sum of monthly payments to calculate your repayment example, but you have not done the same with the IO example. you say (incorectly) that the cost of the interest only option is 190,000 (90,000 interest plus 100,000 last payment). You then correctly state that a savings deposit 2,052 per year is more than enough to pay off the 100,000 capital so surely the cost of the IO option is in fact 90,000 + (2052 x 30) = 151560 (and as you say you also have 8,000 left over). the OP is correct. In financial terms he would be better off. Whether it's a good idea or not would depend on personal circumstances. I cant vouch for his sanity but I agree with his arithmetic. JR