Leave savings in UK or transfer to Australia?

TigerChris74

I have a similar question. I am a UK citizen that has recently migrated to Australia (Sydney) as an Australian citizen and bought a property. I have a mortgage of AUD $550,000 at a rate of 6%. I have savings in the UK of around 130,000 pounds but this is only earning 2% a year. The exchange rate between the UK and Australia is at an all time low (1 pound = about 1.5 AUD$) My question is should I move my UK savings now to reduce my mortgage and in turn the interest repayments even though the exchange rate is so poor OR wait. I realise you need a crystal ball to answer this question but some of my calculations seem to show that even if the exchange rate improved to 1 pound = AUD$2 I would still be better off moving it now. Can this be correct?

RetiredInThailand

TigerChris74 wrote: »

I have savings in the UK of around 130,000 pounds but this is only earning 2% a year.

As I don't have my crystal ball with me today I prefer not to comment on which way currencies will move.

But I am concerned that you are only getting 2% on 130K. Even if you put it into a bog-standard instant access account from the likes of Santander you would be getting 2.6% after tax. If you could tie some of it up then you could be getting up to 3.7% after tax for time-deposits of 5 years, and slightly lower rates for shorter durations.

And as you are non-resident in the UK you can claim back the tax paid up to your personal allowance, and you should qualify to have your interest paid gross at source anyway by using form R105, though not all UK banks will accept this.

So you could be getting up to 4.6% rather than just 2%, which seems like a good idea to me. Of course you may have some AUS tax liability on this also but that would depend on your circumstances.

bigadaj

Primary reason for the strength of the aussie dollar is the mining boom, so a this is unlikely to last forever and the Aussie dollar will fall back, whether this is in one, two or five years no one knows, looks unlikely to go much higher.

Speaking to an Australian colleague one thing I hadn't appreciated was the problems this is causing domestically in oz, manufacturing and exporting is on it's knees, with the slack being taken up by mining and associated construction, which also leads to huge regional differences.

In summary, I don't know.