ContractorMoney 'FLEXIMORTGAGE' OFFER: Tax efficient Offset mortgages for contractors

[northernladuk]

Bah, forgot the offset calculator link...

Here you go. Quite interesting when you start playing with the numbers...

NatWest Offset Calculator

[d000hg]

Thanks NL, I shall have a play.

When we're talking about offset being more tax-efficient due to no tax paid on savings interest, presumably that would only be the case for savings you have on top of ISAs? So if you end up with more left over each year than can fit into ISAs, an offset makes sense... if you fill up ISAs and leave the rest in the company, a regular mortgage is the route to go.

[northernladuk]

Thanks NL, I shall have a play.

When we're talking about offset being more tax-efficient due to no tax paid on savings interest, presumably that would only be the case for savings you have on top of ISAs? So if you end up with more left over each year than can fit into ISAs, an offset makes sense... if you fill up ISAs and leave the rest in the company, a regular mortgage is the route to go.

Yep, or that the mortgage works out better than your ISA. There are some horrible ISA's around at the moment so have to balance the rate of them against the rate of your mortgage I guess. Looking at some of the ISA's on the 'top 10' lists from the money sites the offset option looks a lot more appealing plus the flexibility of being able to use your money should you need it (comparing against tie in ISA's obviously). Just have to do your homework and also your investing style. I like the idea of seeing my mortgage timeline reduce even though it has the same affect as watching your ISA grow and then pay the mortgage off with the ISA. Get to the same ends, just what makes you feel better I guess.

There is always the situation where the banks up the mortgage rates even though the base rate hasn't changed which then means your ISA is not as good an investment. Need a crystal ball though as god knows how things will change at the moment.

[JoannaUCF]

Looking a First Direct, they don't offer an offset with repayment - it's interest only. Which means you have to have the faff of an endowment or similar.

My offset is with first direct - you're right that they don't quote repayment figures, and they have to set them up interest only I think, however the repayment facility is there in the mortgage itself. It's set up as a monthly standing order which they will set to whatever you want your monthly repayment to be. I can amend this figure whenever I want, and make overpayments if I want, or crash it right back to the bare minimum if i want - no charges and no maximum overpayment figure per month. I love it because it's so flexible.

[northernladuk]

My offset is with first direct - you're right that they don't quote repayment figures, and they have to set them up interest only I think, however the repayment facility is there in the mortgage itself. It's set up as a monthly standing order which they will set to whatever you want your monthly repayment to be. I can amend this figure whenever I want, and make overpayments if I want, or crash it right back to the bare minimum if i want - no charges and no maximum overpayment figure per month. I love it because it's so flexible.

Not many of them about now. I have the same with Birmingham Midshires buy struggled to find another one like it in the last year or two.

[Moscow Mule]

My offset is with first direct - you're right that they don't quote repayment figures, and they have to set them up interest only I think, however the repayment facility is there in the mortgage itself. It's set up as a monthly standing order which they will set to whatever you want your monthly repayment to be. I can amend this figure whenever I want, and make overpayments if I want, or crash it right back to the bare minimum if i want - no charges and no maximum overpayment figure per month. I love it because it's so flexible.

That sounds like a winner. Obviously requires discipline to make sure you don't spend it!

It also says on their site now that "you must have a suitable repayment plan". Is that something new maybe?

[JoannaUCF]

That sounds like a winner. Obviously requires discipline to make sure you don't spend it!

It also says on their site now that "you must have a suitable repayment plan". Is that something new maybe?

I've had my offset with them for more years than I care to remember! I've just renewed it in the last few weeks - I must admit the credit process that they took me through was longer and much more thorough than it had ever been before, but the same general rules applied once it was agreed. They did say I needed to have a suitable repayment plan in place, and they asked me what it was, but they don't insist on endowments or anything. I got the impression that the 'you must have...' statement was more from a compliance perspective, that they've made it clear that you're expected to be able to repay the mortgage by the end of the term.

[d000hg]

Joanna do you mind if I ask what kind of % you're paying, and any other key numbers you're comfortable sharing? It sounds like a great product with the level of flexibility you describe.

[barrydidit]

It also says on their site now that "you must have a suitable repayment plan". Is that something new maybe?

The LBG brands have this now for interest only stuff - so from that point of view, it's probably BoE or FSA mandated. In my experience, the previous "yeah, i'll sell my BTL investments to cover the capital" was no longer enough - I had to explain which properties and what lending was secured on these etc. You could use all sorts of things though - pensions etc

I suppose it's all part of the Banks a) looking after their own investments and b) ensuring they can demonstrate due diligence in not lending recklessly and risk another miss selling reclaim feast.