Offsets (Does Martin know this trick?!?!?)

Elektraman

Firstly, let me introduce myself, i'm an Accountant.

In the process of playing with a few ideas I came up with the following idea:

1) Person perhaps has a "Business account" be this for sole trader/partnership or even their own small Ltd Co.

2) Person has current account, perhaps with a few thousand pounds in it.

3) Person also has some debt.

4) person may also have a mortgage.

We all know about "one-accounts" being used to offset mortgage against savings. If you have a business and it has money in it, in some cases 10's of thousands, there is nothing I know of to stop you offsetting the whole lot and gaining a sizable interest reduction.

But did you ever think of using your business account as well? One person I know who pays £70K a quarter in VAT and Taxes does just this and the interest saved is thousands.

But has anyone ever heard of an offset account where you can divide your monies up to different "Pots" without having a mortgage? I'm looking for one of these accounts and if anyone knows of one post here!

abitrubbish

Intelligent Finance has a "pot" system without the need to have a mortgage. The interest rates are not as competitive as it used to be and their customer service is pretty bad so I am leaving them. But I never really used the offset thing anyway, so it could be better for someone who does. Don't know if they would include business accounts though.

i_love_it

I think there is a limit to how much you can offset. around 20% of the loan is maximum, certainly with mortgage trust that is the case.

dollywops

We have an offset mortgage with the Britannia and we offset 100%.

Reestit_Mutton

dollywops wrote:

We have an offset mortgage with the Britannia and we offset 100%.

Ditto for the Yorkshire BS - we're not there yet but they will allow you to completely offset your mortgage balance.

They also allow you to have up to three offsetting accounts, which is great...one is in my name, one is in my other half's name and one is in joint names. We use the sole named accounts to squirrel away our own savings and the joint account to pay the monthly mortgage payments from.

We have set up monthly DDs from our current accounts to the joint offset account for our mortgage payments and we are free to adjust these at will as the joint offset account has a large cash balance that we placed there when we arranged the mortgage which can sustain the mortgage payments for a very long time indeed.

Afterall, why actually use the spare cash to pay down the mortgage balance itself if it costs you no more to keep the cash fully accessible in the offset account?

Reestit Mutton