Overpay Mortgage or Keep Gaining Interest

Thrugelmir

chrisrsmith wrote: »

That's where I am seeking advice - and indeed the amount gaining 3% is important (my bad for not mentioning) is 90K. So yes considering just a year it's simple - but over the term of the mortgage, what is the better thing to do?

Where do you hold your savings?

To earn 3% in ISA's currently would require a 5 year fixed term.

chrisrsmith

Thrugelmir wrote: »

Where do you hold your savings?

To earn 3% in ISA's currently would require a 5 year fixed term.

As I am UK Tax free - I use multiple Santander 123 accounts.

BR
Chris

bowlhead99

chrisrsmith wrote: »

As I am UK Tax free - I use multiple Santander 123 accounts.

BR
Chris

Don't take this the wrong way but my suspicion is that you are only "uk tax free" in the sense that you asked on this forum back in May whether you should pay tax on your uk savings income and nobody replied to you, so you simply decided not to:

chrisrsmith wrote: »

Hi
I work in Germany and pay taxes in country as I am employed and paid there.
I have savings in the UK but am unsure whether these can be treated as Tax Free? I believe they are as I am not paying tax in the UK. I have a property in the UK and spend approx 35 calendar days in the UK.

Advice?

Thanks
Chris

As I commented further up this thread, presumably your income is greater than minimum wage level in whatever country you're resident in (or at least your income generally will be, over the next 6 years of your mortgage), and given most countries tax you on worldwide income (with appropriate relief for double taxation on the same income), I can't see how you end up being tax free on a specific slice of savings income just because you earn it in a country you're not currently living.

Otherwise everyone would put their money in overseas accounts and claim to be "[X country] tax free". However, that is not a valid tax avoidance scheme; instead, failing to declare all your income is more commonly known as tax evasion.

If you are permanently /indefinitely leaving the UK, you can get an advantage the year you leave (and potentially the year you come back, several years later) because you can get a full year's annual allowance when you're only in the country for just the start or just the tail end of a tax year, leaving you on a low or zero marginal rate for that little period.

This wouldn't work if you were only leaving temporarily (ie weren't continually non resident for at least one full April-April tax year), and obviously won't help every year of your 6 year mortgage term which is the period for which you're trying to assess your options.

Like I said in post 11 above, feel free to correct me if I'm wrong. Just trying to help you ensure you have a valid base for your calculations (and don't accidentally fail to pay your tax, creating penalties and other woes)

atush

chrisrsmith wrote: »

I also have a cash ISA

Doesn't answer my question, have another go?

atush

If you are not resident in the UK, you don't have to pay tax on your interest in the UK and can register to have it paid gross.

but you may be liable to pay tax on it in your country of residence and declare it on your tax forms there? So ask your local tax authority- this a UK forum so we won't know.

chrisrsmith

atush wrote: »

Doesn't answer my question, have another go?

Suggestions?

lisyloo

Suggestions?

I believe atush is asking why you haven't invested in other asset types like for example stocks & shares.

I'm also making a profit on my mortgage and for me the reason why I'm using cash is that the the timescale to pay off the mortgage is too short for investment in equities or property.

Oh ...and I'm not willing to risk the roof over my head and the cash is safe.