📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Help Please-Offset mortgage

Hi,

I could do with some advise if poss. We (my wife and I) have an offset mortage. We currently owe about 121k on the mortgage. We are currently offsetting about 105k so the interest we are paying is quite small. We still pay off 1k per month.

I am right on the verge of paying higher rate corporation tax( I think this is 40%) on my dividends/earnings.

My current interest rate on the mortgage is 5.74%(we have a tracker mortgage 0.74% above base).

whilst my capital isnt growing (as it is offsetting) I understand that I am effectivley earning/saving about 8% as I am not paying tax on interest.

Is my understand correct or is there something better (savings account or different mortgage) I could be doing with my capital considering my circumstances.

Any advice welcome.

Comments

  • opinions4u
    opinions4u Posts: 19,411 Forumite
    Offsetting is an excellent use of a higher rate taxpayer's savings.

    A 5.74% rate equates to 9.57% gross for a higher rate taxpayer.

    Pretty good way of operating your finances while retaining access to your funds.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    You are going to be 100% offset soon(16months) and then you need to find a home for the excess income that will be taxable. so will take you into the 40% bracket and will depend on what tax the OH pays on her liability if you give it to her.

    aving £12kpy is more than the 2*£3600 annual ISA allowance so it is time to start using up those allowances to build up that tax free pot if not filling them allready.

    If the OH is a non/low rate tax payer there will be some regular savings accounts that will be better than the mortgage rate so could be used as well but a bit more hastle/work to set up for some small gains.
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 351.3K Banking & Borrowing
  • 253.2K Reduce Debt & Boost Income
  • 453.7K Spending & Discounts
  • 244.3K Work, Benefits & Business
  • 599.4K Mortgages, Homes & Bills
  • 177.1K Life & Family
  • 257.7K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.2K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.