I have some savings in an easy access stocks & shares ISA. I view this as long-term savings/emergency money. Is it preferable to leave the money in there or is it better to transfer that across into my offset mortgage account (see Wikipedia). The offset is also liquid in that its easy access.

Again I suppose it comes down to what are the benefits over the long term; in favour of reducing debt or investing?


3 Answers 3


Assuming no constraints on how much you can move (or how frequently) into and out of your offset mortgage account, the question becomes one of what rate of return you expect from your long-term savings/emergency cash fund. The rate you are getting from the offset mortgage account is known; since it reduces the principal amount owing and thus reduces interest charges, the return is the mortgage rate (though I would not be surprised if the offset mortgage account contract has bells and whistles reducing the effective rate, saying something like 3 pounds reduction of principal for every 5 pounds you put in). So, as a movie character once said, "Do you feel lucky today?" If so, move money from your offset mortgage account to savings, and earn more. If not, move money in the opposite direction. A "guaranteed" 2% return on the offset mortgage account might be better than taking a risk on the vagaries of the stock market, and even the possibility of loss in your long term savings account.


I think the key thing is flexibility - the money is not tied in with the offset mortgage. If you find a better investment, you can always take some of it out and put it towards that instead.

Once it matures, if there is nothing good to reinvest in, then it can go back into the offset mortgage.

Once you have had money in the offset account, even if you take it out, you have already (irreversibly) saved money on your mortgage.

Right now you would be pressed to find an instant access ISA with a rate higher than 1.5%, so if you need immediate access, then the offset account seems good.

On the other hand, for retirement, you might be saving longer term, and then you can get an ISA rate of 3%, currently, which may be better for a part of the money (or perhaps the upcoming Lifetime ISA with 25% yearly bonus may make sense for part of the money), if you do not need easy access to all of it.

As Dilip says, this assumes you want safe investments.


The way offset mortgages work, you are keeping savings in an account effectively earning the rate of the mortgage. You have the ability to leave it, paying the mortgage off early, or borrowing back, any time.

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