Tax dodging and rate rises

It's worth doing your sums to work out your mortgage, says Keith Hood

It's worth doing your sums to work out your mortgage, says Keith Hood - Credit: Getty Images/iStockphoto

Tax dodging and mortgages may be two separate issues but Keith Hood, a financial advisor at Warners Financial Services, discusses both topics.

Keith Hood, Warners Financial Services

Keith Hood, Warners Financial Services - Credit: Archant

Well I've been banging on about interest rate rises for long enough and did you listen? No, you were too busy stuffing your money into offshore funds and setting up companies in the Channel Islands weren't you?

It's interesting that the very people recently being highlighted as avoiding as much tax as possible seem to be the ones that can most afford to pay. However, it does pose the moral questions that individually we need to ask ourselves. If we were shown a legal way to pay less tax would we get involved? If everyone paid their tax in the normal way would we all benefit from better public services for example? If the tax revenue was much higher would it mean that we could recruit more nurses and teachers if we could pay them more?

To be fair not all of you were too busy tax dodging to read my column and certainly almost all of our clients in the last few years have chosen fixed rate mortgages. However it seems our clients are not typical, according to UK Finance, almost half of the UK's 9.2 million mortgage holders are on variable rate mortgages. When interest rates were at an all time low I find it strange that so many people didn't want the security of a fixed rate. Are more rises likely? Undoubtedly in my view and you'd struggle to find many people in the mortgage industry to argue with me. So the puzzling question is why have so many people not taken action to move their mortgage onto a low fixed rate? In some cases there are perfectly valid reasons, for example, in almost all cases a fixed rate will tie you to the lender during the fixed rate period so if you want to pay the mortgage off in that time a large penalty often applies. You may also be considering moving house in that time so want to keep your arrangements flexible. However if you don't have a valid reason for staying on a variable rate then surely the Bank of England have given you the nudge you need towards an independent mortgage advisor, probably one based in Wymondham if you've got any sense! The monthly savings can be huge and I assure you are perfectly legal. They may even be enough to encourage you to start paying VAT when you buy your next jet plane.

You can contact Keith Hood at Warners Financial Services, sponsors of this column, on 01953 607313 or