Santander 123 - Savings, Bills, Mortgage ahoy...

jjb4780

Hi folks,

First time posting here on the forums so please be kind! Feedback on protocol welcome

My wife and I recently opened a Santander 123 account to take advantage of the savings and bills cashback benefits offered by the account.

The account’s been opened with us as both primary account holders, I’m in the process of switching across all of our joint DDs; and I’m trying to get my head around the best way to take advantage of the 3% interest rate on balances over £3,000. My wife is a basic rate tax payer, I am likely cross the higher rate threshold (dependant on commission), by the end of the 2014/15 tax year.

Having looked into it a little further, my understanding (looking for clarification!) is that if even if I cross into the higher rate tax band by just £1, any interest earned on our savings in the 123 account would be taxed at 30%? So in this sense, it’d be better to have the account (and our savings) in my wife’s name only?

2.1% vs 2.4% AER correct?

Important to point out trust is not an issue.

The catch is (or maybe it isn't), we are in the early stages of saving for a mortgage, first time buyers…

I currently have all direct debits for our bills in my Nationwide current account, however I have hardly any DDs of my own, maybe zero DDs when we come around to mortgage application – No mobile contract (provided by work), car insurance paid outright etc.

I wonder if anyone could shed light on whether having the 123 account in my wife’s name might be a potential drawback? Will a mortgage provider look upon it unfavourably if I don’t have any DDs against my name when it comes round to applying? i.e. if all our bill payments DDs are in my wife’s name on the 123 account?

Maybe we should only move the DDs to Santander on which we receive cashback? Happy to do this if leaving myself with some DDs will be best for mortgage application but would obviously be easier to have all our bills coming from one account.

Thanks in advance!

bigadaj

Seems a bit of a conflation of questions there if it's a joint account then the interest would be allocated equally to both parties, so you could be paying 40% on half, so yes 30% overall. It should be easy to pay your earnings above the higher rate allowance into a pension and avoid the tax on that, though if you get interest that takes you over the limit that element is taxed at the higher rate.

Depending on the sums then there are better deals with nationwide, tsb, lloyds a nd others, also no reason not to have multiple accounts.

In terms of credit record for a mortgage then best option is often getting one or more credit cards and then paying them off in full each month, this would be better than direct debits or a mobile contract.

utab007

jjb4780 wrote: »

Hi folks,

First time posting here on the forums so please be kind! Feedback on protocol welcome

My wife and I recently opened a Santander 123 account to take advantage of the savings and bills cashback benefits offered by the account.

The account’s been opened with us as both primary account holders, I’m in the process of switching across all of our joint DDs; and I’m trying to get my head around the best way to take advantage of the 3% interest rate on balances over £3,000. My wife is a basic rate tax payer, I am likely cross the higher rate threshold (dependant on commission), by the end of the 2014/15 tax year.

Having looked into it a little further, my understanding (looking for clarification!) is that if even if I cross into the higher rate tax band by just £1, any interest earned on our savings in the 123 account would be taxed at 30%? So in this sense, it’d be better to have the account (and our savings) in my wife’s name only?

2.1% vs 2.4% AER correct?

Important to point out trust is not an issue.

The catch is (or maybe it isn't), we are in the early stages of saving for a mortgage, first time buyers…

I currently have all direct debits for our bills in my Nationwide current account, however I have hardly any DDs of my own, maybe zero DDs when we come around to mortgage application – No mobile contract (provided by work), car insurance paid outright etc.

I wonder if anyone could shed light on whether having the 123 account in my wife’s name might be a potential drawback? Will a mortgage provider look upon it unfavourably if I don’t have any DDs against my name when it comes round to applying? i.e. if all our bill payments DDs are in my wife’s name on the 123 account?

Maybe we should only move the DDs to Santander on which we receive cashback? Happy to do this if leaving myself with some DDs will be best for mortgage application but would obviously be easier to have all our bills coming from one account.

Thanks in advance!

If it's a joint account the interest will be shared between you. If it works out better having it in your wife's name then take advantage, but if it's only over by a small amount I wouldn't worry about it. I don't think it will put you on the top of the tax evasion list. The likes of Bernie Ecclestone & Philip Green get away without paying hundreds of millions in tax.

If you have a Santander mortgage you would be crazy not to take advantage of the cashback. The cashback on other bills is not much and in my case just covers the £2 per month fee.

You can also setup direct debits by paying money into a tesco savings account from any number current accounts.

Just do the sums and see if it's worth doing.

colsten

utab007 wrote: »

The cashback on other bills is not much and in my case just covers the £2 per month fee..

The cashback depends on the size and type of your qualifying DDs. I always get between £11 and £13 every month.No mortgage, before you ask.

utab007

colsten wrote: »

The cashback depends on the size and type of your qualifying DDs.

Yes I know. In my case I have multiple accounts and not enough direct debits to take advantage cashback on major bills. Just pointing out that the bulk of the cashback comes from the larger bills (1% on water, council tax AND 2% energy bills)

Not sure what the average mortgage is these days, but I would think above £300 per month. So if you had a Santander mortgage it would provide most cashback compared to the others mentioned above

utab007

colsten wrote: »

I always get between £11 and £13 every month.No mortgage, before you ask.

I would be interested to know how you're getting that amount of cashback. You must have some very large bills

Al1x

utab007 wrote: »

I would be interested to know how you're getting that amount of cashback. You must have some very large bills

colsten wrote: »

The cashback depends on the size and type of your qualifying DDs. I always get between £11 and £13 every month.No mortgage, before you ask.

I think I prefer the smaller bills and the smaller amount of cash back lol

colsten

utab007 wrote: »

I would be interested to know how you're getting that amount of cashback. You must have some very large bills

Al1x wrote: »

I think I prefer the smaller bills and the smaller amount of cash back lol

There are various reasons why some people have larger or smaller, and/or more or fewer bills than others. There is no right or wrong - it's just that the Santander cashback depends on the size and type of your qualifying DDs

hyposmurf

Might be worth you setting up some direct debits in your name.Having no credit history lenders usually err on the side of caution, as they have no idea whether you are likely to have problems paying bills.You can get a credit card that you top up yourself each month that builds up your credit history.Have a look at this MSE article:

http://www.moneysavingexpert.com/credit-cards/bad-credit-credit-cards#rebuild

jjb4780

hyposmurf wrote: »

Might be worth you setting up some direct debits in your name.Having no credit history lenders usually err on the side of caution, as they have no idea whether you are likely to have problems paying bills.You can get a credit card that you top up yourself each month that builds up your credit history.


Thanks for all of your feedback.

I have a number of credit cards and good credit history - use of my CCs is in line with all of the advice found here on MSE so no concerns there.

So with this the case, will it not make a difference if i have no DDs on accounts under my own name? I'll have tons of standing orders moving money around between accounts, but just no DDs.

eskbanker

jjb4780 wrote: »

I have a number of credit cards and good credit history - use of my CCs is in line with all of the advice found here on MSE so no concerns there.

So with this the case, will it not make a difference if i have no DDs on accounts under my own name? I'll have tons of standing orders moving money around between accounts, but just no DDs.

Mortgage lenders aren't interested in DDs as such, they're interested in your ability to manage credit, so if you have credit cards and are paying them off in full (or at least in compliance with Ts & Cs) then doing so by DD doesn't really help, same for other bills too....