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Debate House Prices
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Person of Interest Only
Comments
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The well established principle underlying this is that people have different desires and needs.
For example someone wanting a £250k mortgage may well benefit by paying a higher fee but lower interest rate, whereas someone wanting £70k may find the lower fee deal more prudential.
Furthermore folk have different tastes. One mans all u can eat restaurant is anothers idea of greedy unhealthy lowest common denominator hell.
Thought that would be reasoning I was just a little surprised they could use the same APR.
2 year deal actual rate 3.09% £999 fee or 3.49% £99 fee with a 3.9%APR for both. Plugging in say£50k for demonstration purposes gives a different cost of credit. Guess I am being a bit thick somewhere."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
Out of interest I was talking to a Building Society rep today and he has pure I/O. His plan was always to take on a large house and mortgage and downsize one day. He has built substantial equity as the house is very desirable.
I too have I/O and have perfectly robust repayment plans.
My Accountant the same.
We're not all loons you know!
That, sir, is a matter of opinion...;)It's getting harder & harder to keep the government in the manner to which they have become accustomed.0 -
Out of interest I was talking to a Building Society rep today and he has pure I/O. His plan was always to take on a large house and mortgage and downsize one day. He has built substantial equity as the house is very desirable.
I too have I/O and have perfectly robust repayment plans.
My Accountant the same.
We're not all loons you know!
Before my mortgage lender told me that they didn't have a problem with me having an IO mortgage and no repayment vehicle I was considering telling the provider that I was going to use my pension as a repayment vehicle. I wouldn't really use my pension as I intend just downsizing, paying off the mortgage and buying a smaller place for cash, but it would have shut them up and allowed me to get on with managing my own finances like a grown up.
However, after looking it into it a bit more, I'm seriously considering doing it. For every £60 I put into my pension the government would put in £40, seriously helping me pay off my mortgage. Plus by putting a chunk of money into a pension (say £1000 per month - similar to the repayment portion of a mortgage), I would reduce my income to the point where I would qualify for child benefit when the new rules come in next year.
Mortgage free and a huge retirement fund, subsidized by the tax payer. Not a bad financial stratgegy and one of the few ways a PAYE taxpayer can avoid taxation.0 -
Eellogofusciouhipoppokunu wrote: »Before my mortgage lender told me that they didn't have a problem with me having an IO mortgage and no repayment vehicle I was considering telling the provider that I was going to use my pension as a repayment vehicle. I wouldn't really use my pension as I intend just downsizing, paying off the mortgage and buying a smaller place for cash, but it would have shut them up and allowed me to get on with managing my own finances like a grown up.
However, after looking it into it a bit more, I'm seriously considering doing it. For every £60 I put into my pension the government would put in £40, seriously helping me pay off my mortgage. Plus by putting a chunk of money into a pension (say £1000 per month - similar to the repayment portion of a mortgage), I would reduce my income to the point where I would qualify for child benefit when the new rules come in next year.
Mortgage free and a huge retirement fund, subsidized by the tax payer. Not a bad financial stratgegy and one of the few ways a PAYE taxpayer can avoid taxation.
:hello: So it is true sock puppet."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
grizzly1911 wrote: »:hello: So it is true sock puppet.
Did you doubt us!?
I count 5-6 usernames so far.
Intoodeep, ditheringdad, MFW10Y, renoman, pricklypants, this one which I can't be bothered to type...0 -
That sentence doesn't make any grammatical or logical sense. I'm confused how your nonsensical post related to the text you quoted? What are you trying to say?grizzly1911 wrote: »:hello: So it is true sock puppet.
Do you disagree with the post of mine that you quoted? Should I not use a pension as an mortgage repayment vehicle?0 -
Eellogofusciouhipoppokunu wrote: »That sentence doesn't make any grammatical or logical sense. I'm confused how your nonsensical post related to the text you quoted? What are you trying to say?
Do you disagree with the post of mine that you quoted? Should I not use a pension as an mortgage repayment vehicle?
I was also quite confused by his very badly worded post, maybe he was extremely drunk when he posted it? Lol I just realised someone actually thanked it!Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop0 -
chucknorris wrote: »I was also quite confused by his very badly worded post, maybe he was extremely drunk when he posted it? Lol I just realised someone actually thanked it!
Certainly not chuck I don't see why I should willfully contribute to the exchequer.
No it was simply for the recipient. Don't concern yourself..
I think his plans sound wonderful BTW. Well thought through and I wish him well."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
Eellogofusciouhipoppokunu wrote: »However, after looking it into it a bit more, I'm seriously considering doing it. For every £60 I put into my pension the government would put in £40, seriously helping me pay off my mortgage. Plus by putting a chunk of money into a pension (say £1000 per month - similar to the repayment portion of a mortgage), I would reduce my income to the point where I would qualify for child benefit when the new rules come in next year.
Mortgage free and a huge retirement fund, subsidized by the tax payer. Not a bad financial stratgegy and one of the few ways a PAYE taxpayer can avoid taxation.
I'm about 20 years from retirement. I've always thought paying the mortgage off with a pension lump sum was a bit mental but I've been looking at it much more closely.
You can take 25% tax free at retirement so for every £100 in the pot (£40 of which was a tax refund) you can take out £25 which means you get back something like 40% of net contributions as cash. The danger is that the government change the rules regarding tax free lump sums.
The (similar) alternative is to take the lump sum at age 55 just in case the favourable tax treatment changes BUT don't just leave the remaining pot to build up because, once cystallised, it's subject to a tax charge if you die. Instead start taking income via drawdown (paying 40% tax) and then immediately pay the income into a new pension (getting the tax back). This builds up a new fund from which you can take another lump sum later and, importantly, funds that aren't crystallised aren't subject the same tax as uncrystallised funds if you die so the situation for your heirs is better.
This pension income recycling is acceptable to HMRC. What you can't do is recycle the lump sum back into another pension.0 -
I'm about 20 years from retirement. I've always thought paying the mortgage off with a pension lump sum was a bit mental but I've been looking at it much more closely.
You can take 25% tax free at retirement so for every £100 in the pot (£40 of which was a tax refund) you can take out £25 which means you get back something like 40% of net contributions as cash. The danger is that the government change the rules regarding tax free lump sums.
The (similar) alternative is to take the lump sum at age 55 just in case the favourable tax treatment changes BUT don't just leave the remaining pot to build up because, once cystallised, it's subject to a tax charge if you die. Instead start taking income via drawdown (paying 40% tax) and then immediately pay the income into a new pension (getting the tax back). This builds up a new fund from which you can take another lump sum later and, importantly, funds that aren't crystallised aren't subject the same tax as uncrystallised funds if you die so the situation for your heirs is better.
This pension income recycling is acceptable to HMRC. What you can't do is recycle the lump sum back into another pension.
Thanks for this, certainly something to consider. I have often thought about how to shield the 25% lump sum from the tax man, and paying off part of the mortgage seemed to be a decent way of doing it. Recycling the pension in drawdown as you have advised would be another crafty way of avoiding tax, because all of the drawdown would be going into a pension plan and so none of it would be taxable, plus you get the 40% uplift. Combined with the continued contributions from salary, the new pension pot would build up really quickly, giving you a second 'bite of the cherry' with another 25% tax free lump sum.
This is brilliant, thanks so much for the advice.
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