Repayment vehicle interest only mortgage ING direct

holly_hobby

It is completely up to you if you have an interest only or repayment mortgage - the fall out of not having a repayment plan in mind is completely your own. (the higher amount of repayment mortgages now effected, are in relation to the fact that residential mortgages effected over 75% LTV, now have to be on a repayment basis)

ISAs are perfectly acceptable tax efficient repayment vehicles as are pensions (notwithstanding any HRMC amendments and lifetime allowances with respect to TFC from pension provision) - and are not assigned by the lender.

You just give them your ISA policy details, and/or pension plan details. They may ask for emvs on the pension, and your elected ISA contributions (which should obviously be the max permitted each yr).

Under current regs, they have a duty of care to ensure that they are able to demonstrate that they have established from you your intended method of repayment - its nothing to be worried about.

Hope this helps

Holly

dunstonh

Pension can be cost efficient if you are a higher rate taxpayer and can afford to repay the mortgage by other means should legislation change. It will be damned expensive though on a monthly basis.

Stocks and Shares ISA is the most common option but with a sensible target growth rates, the total monthly cost will be more than a repayment mortgage.

Bottom line is that interest only with a repayment vehicle is going to be more expensive than repayment mortgage.

holly_hobby

dunstonh wrote: »

Stocks and Shares ISA is the most common option but with a sensible target growth rates.

S&S ISA will in the main, certainly have a better chance of gains than a cash ISA - but as an asset backed investment mortgage repayment vehicle (regardless of the risk profile of the SS ISA), you need to consider that the value of the fund may rise as well as fall depending upon market activity.

A fall and the significance of it, may well result in a depreciation of the value of your overall SS fund held within the ISA wrapper (until of course the markets gather themselves again, and the value of the underlying assets rally). Waiting for a the value to return to somewhere near the original value, or target value, before fall, may well cause a delay in encashment and mortgage redemption - so do bear this in mind.

Of course, if you do consider yourself to have a medium to speculative mortgage risk profile, and have both the financial and personal capacity to accept the potentially volatile nature of asset backed investments - then as I say a SS ISA (held over medium to long term) would generally offer the prospect of higher returns over an equivilent cash investment. The key to minimising the impact of market activity impact on your portfolio, would be achieved by adequate diversification of the investments held in each class (which should always include an element of an instant access cash reserve).

Pension mortgage - as discussed is a valid tax efficient option, and as Duns states, may become costly or provide less, depending upon your allowable contributions, overall performance of the scheme, and amendments to TFC lifetime allowances. But it certainly doesn't have to be used in islotation, you may use a variety and combination of vehicles to achieve your target, of which a pension, ISA, endowment, bonds, gilts .. etc .. etc - may on a singular basis entirely fund your mge repayment, or as a combination form the basis of your mge repayment portfolio.

You may well wish to effect an ISA now for speed of completion. But as you can see from discussions here, it can be a complex area for the layman to successfully navigate, and I therefore strongly suggest that you take professional advice from a whole of market IFA asap, with regards to forming a suitable repayment plan consitent with your financial requirements, situation and risk profile.

Hope this helps

Holly

Thrugelmir

Kraecki wrote: »

Yes sure but the interest rate is much worse. I would get 2.39% + Bank of England base rate. And it is a lifetime tracker. Or do you know any better offers?

How much better are you expecting?

Kraecki

Thanks for all the advise. I paid the booking fee to ING Direct now and hope they will accept the application. I have pretty much used my ISA allowance for this tax year already though. That is where my deposit on. I think I need to speak to an IFA to get this sorted.