All-in-one Accounts; Good, Bad, Ugly?

Bernie

jamesd wrote:

Bernie, worth remembering that you can currently get 5.75% tax free from Ruffler Bank in an ISA, so it may actually pay to transfer the ISA there and pay interest on the mortgage.

...I think the difference is pretty small - and we used this year's ISA entitlements already.

The Ruffler Bank is probably where our first ISA will be heading in April.

We have just spotted something interesting, the small credit we have in our IF accounts offsetting our mortgage have accrued interest in our remaining TOISA (tax-free) rather than in the deposit account (tax deducted) as we expected. I am now checking the interest rate being paid, if it is high enough, it may benefit us more in the long run have all our funds in IF rather than have deposits in ICICI. No response from IF at present...

:beer:

jamesd

Bernie, whether you've used your allowance this year doesn't matter, because you can transfer the current and past years from any number of providers using a transfer form.

If you start with Ruffler Bank in April, with new contributions, not a transfer, you won't meet their recently introduced 12000 minimum balance requirement.

That interest payment is presumably a mistake, since it would be a significant loophole in the ISA legislation if interest from any accounts could be credited to the ISA account, effectively placing an unlimited amount of interest beyond tax. Or, they may have made the interest payment as part of your annual ISA contribution limit, for some reason.

jayne.doe, it sounds as though you're using it properly but that it is not the cheapest type of mortgage for you. No sign there that you have a large portion of your mortgage going in and out each month and that's what it takes for it to deliver a benefit compared to a cheaper offset mortgage from a different lender. If you don't have that high proportion going in and out, the very high interest rate costs you more than you save from the current account balance reduction. If you're only adding a few thousand a month or less to savings, an offset account would be significantly cheaper. To see a worked example for a 250000 mortgage of it taking three and a half years longer and costing 66000 more than a different mortgage, for the same monthly payment, see Overpayments and offset mortgages.

Bernie

jamesd wrote:

Bernie, whether you've used your allowance this year doesn't matter, because you can transfer the current and past years from any number of providers using a transfer form.

If you start with Ruffler Bank in April, with new contributions, not a transfer, you won't meet their recently introduced 12000 minimum balance requirement.

That interest payment is presumably a mistake, since it would be a significant loophole in the ISA legislation if interest from any accounts could be credited to the ISA account, effectively placing an unlimited amount of interest beyond tax. Or, they may have made the interest payment as part of your annual ISA contribution limit, for some reason.

...I was under the impression that in using up our allowances, we had used annual "go" for our ISA. I shall be on the Ruffler-Transfer case tomorrow...

Regarding the interest, it is being credited to our remaining TOISA (we had one each original, amalgamated one during last transfer). I am letting more funds accumulate in IF to see what transpires.

jamesd

You've used your go for this year, but you can transfer within the year, just can't pay in more than the limit each year. You could switch once a week if you liked, so long as you stayed within the limit and used an ISA transfer form each time (if the banks could keep up:)).