mxh Posted August 2, 2016 Share Posted August 2, 2016 I've just inherited some money in the UK (about £20k) but am living in Australia, and will be for the foreseeable future, even if not for ever. I have a mortgage in the UK. However the interest rate is only 1% (and it doesn't look like going up any time soon), so I'm looking at ways of getting a better return on the money rather than just paying off a chunk of the mortgage. As the Exchange rate is so poor, it's not worth bringing it over to Australia at the moment (which is a shame, as my mortgage interest rate here is 4%) As I'm not a UK resident, I can't open any UK based ISAs or other accounts that may have reasonable introductory offers (and the 'standard' rates that they offer are pretty much 0%) I've not invested in stocks and shares before, but maybe that's an option? Will not being a UK resident cause any issues for this type of investment? Or any other ideas about how to get a better return than the mortgage option? Link to comment Share on other sites More sharing options...
Marisawright Posted August 2, 2016 Share Posted August 2, 2016 I know the exchange rate isn't great at the moment, but I think you need to consider how much better it's likely to get. Even at a bad exchange rate, being able to hit your Australian mortgage with a large chunk of money will save you thousands of dollars in interest. Link to comment Share on other sites More sharing options...
mxh Posted August 2, 2016 Author Share Posted August 2, 2016 Ultimately, paying off the Aus mortgage would be the preferred option - although I feel that the pound is probably at a low(ish) point at the moment - Brexit saw to that. So I'm pretty confident that the pound will improve over time - which means that moving the money over now would get me nowhere. Of course, that's all supposition on my part, but I'm not going to bet against myself. Are there any other options for non-residents to invest and get a reasonable return? Anyone else been in the same situation? What did you do? Link to comment Share on other sites More sharing options...
Parley Posted August 2, 2016 Share Posted August 2, 2016 Mortgage is probably he best option. You are effectively getting a tax free return by doing that, whereas you pay tax on earnings from other investments. Paying off a mortgage is always a good idea. Link to comment Share on other sites More sharing options...
mxh Posted August 2, 2016 Author Share Posted August 2, 2016 Mortgage is probably he best option. You are effectively getting a tax free return by doing that, whereas you pay tax on earnings from other investments. Paying off a mortgage is always a good idea. Yes, that's true - but it's only a 1% tax free return. I'd hope (like) to do better than that. Plus I would like to bring the money over to Aus at some point in the future (when the exchange rate gets better - see previous comment) but once it gets sucked into the UK mortgage I can't get it out again. Link to comment Share on other sites More sharing options...
Parley Posted August 2, 2016 Share Posted August 2, 2016 I meant bring it to Australia and pay off your Australian mortgage. Link to comment Share on other sites More sharing options...
mxh Posted August 2, 2016 Author Share Posted August 2, 2016 I meant bring it to Australia and pay off your Australian mortgage. Ah, I see. Although I've covered why I don't want to do that just yet. Link to comment Share on other sites More sharing options...
Marisawright Posted August 2, 2016 Share Posted August 2, 2016 Ultimately, paying off the Aus mortgage would be the preferred option - although I feel that the pound is probably at a low(ish) point at the moment - Brexit saw to that. So I'm pretty confident that the pound will improve over time - which means that moving the money over now would get me nowhere. Of course, that's all supposition on my part, but I'm not going to bet against myself. What I'd suggest is, work out what you'd save by bringing the money over at the current exchange rate and putting it into the mortgage. There are plenty of calculators that will show you how much interest you'll save by paying a mortgage off early. Then work out how much the exchange rate is likely to improve and how much money that would make you. I would think that the savings in interest on the mortgage would be more than the extra you could hope to gain by waiting for a slightly better exchange rate. Just guessing though, so it would be worth trying to do the calculation. Link to comment Share on other sites More sharing options...
Keith and Linda Posted August 2, 2016 Share Posted August 2, 2016 I have recently sent a large sum over to the UK into my HSBC account and going through all the possible options for savings/investment available with my bank I'm afraid I drew a blank, as on most I had to declare that I was a resident of the UK. I had previously (about 2 years ago) put some 20 grand into a fixed term account, but that is now not an option due to residency. I would add that on this fixed term account that tax was deducted at source on all interest earned and really at the end of the day it would not have produced a decent night out. I have recently tried premium bonds, but that is proving troublesome too (unless you already have an account with them) They actually want a check drawn on my account which must also have my name on the check (do they really still use checks?). However my son In England bought some Premium Bonds to during a period between selling and buying a home, they had a nine grand win, which was not a bad return over a 15 month period. You may have to bight the bullet and just ship it over. Good luck with whatever you choose. Link to comment Share on other sites More sharing options...
mxh Posted August 2, 2016 Author Share Posted August 2, 2016 What I'd suggest is, work out what you'd save by bringing the money over at the current exchange rate and putting it into the mortgage. There are plenty of calculators that will show you how much interest you'll save by paying a mortgage off early. Then work out how much the exchange rate is likely to improve and how much money that would make you. I would think that the savings in interest on the mortgage would be more than the extra you could hope to gain by waiting for a slightly better exchange rate. Just guessing though, so it would be worth trying to do the calculation. OK, let's look at it over a 2 year period If I bring the £20000 over now at 1.75 then I get $35000. Pay that into the mortgage at 4%, for 2 years thats a saving of (35000*.04*2)=$2800 (forget compound interest for now as it's only 2 years) If I leave it in the UK and can get 2% after tax, thats (20000*.02*2)=800 So after 2 years I have £20,800 and need to convert that into $37800 to 'break even' on the deal - thats a rate of $1.82. If the rate goes up to 2.00 to 1, then I have $41,600 - a 'profit' of $3800 Even if I get zero interest in the UK then a rate of 1.89 would see me break even. So if I'm betting on the pound bouncing back (which I am) it doesn't have to bounce very far to make holding out worthwhile. Again, I accept that I haven't got a crystal ball, and there's no guarantee that it will come back. But it will Link to comment Share on other sites More sharing options...
rammygirl Posted August 2, 2016 Share Posted August 2, 2016 You could consider peer to peer lending in the Uk, some will allow non residents to invest as long as they have a UK bank account. Riskier than just leaving it in the bank but better returns. Even the lower risk options return 5% on average and are like bonds although no bank guarantee if they go pop! It is ridiculous now that as non residents we can't even move our money to a different account within the same bank! How can that be money laundering or avoiding tax. Other options are Stirling off shore accounts with UK banks, usually pay better interest rates too, at least the smaller ones. Link to comment Share on other sites More sharing options...
newjez Posted August 2, 2016 Share Posted August 2, 2016 I've just inherited some money in the UK (about £20k) but am living in Australia, and will be for the foreseeable future, even if not for ever. I have a mortgage in the UK. However the interest rate is only 1% (and it doesn't look like going up any time soon), so I'm looking at ways of getting a better return on the money rather than just paying off a chunk of the mortgage. As the Exchange rate is so poor, it's not worth bringing it over to Australia at the moment (which is a shame, as my mortgage interest rate here is 4%) As I'm not a UK resident, I can't open any UK based ISAs or other accounts that may have reasonable introductory offers (and the 'standard' rates that they offer are pretty much 0%) I've not invested in stocks and shares before, but maybe that's an option? Will not being a UK resident cause any issues for this type of investment? Or any other ideas about how to get a better return than the mortgage option? Have you thought of buying another UK property? Link to comment Share on other sites More sharing options...
newjez Posted August 2, 2016 Share Posted August 2, 2016 OK, let's look at it over a 2 year period If I bring the £20000 over now at 1.75 then I get $35000. Pay that into the mortgage at 4%, for 2 years thats a saving of (35000*.04*2)=$2800 (forget compound interest for now as it's only 2 years) If I leave it in the UK and can get 2% after tax, thats (20000*.02*2)=800 So after 2 years I have £20,800 and need to convert that into $37800 to 'break even' on the deal - thats a rate of $1.82. If the rate goes up to 2.00 to 1, then I have $41,600 - a 'profit' of $3800 Even if I get zero interest in the UK then a rate of 1.89 would see me break even. So if I'm betting on the pound bouncing back (which I am) it doesn't have to bounce very far to make holding out worthwhile. Again, I accept that I haven't got a crystal ball, and there's no guarantee that it will come back. But it will Eventually. But we have to sort brexit first so it may take some years. Link to comment Share on other sites More sharing options...
Richard01 Posted August 2, 2016 Share Posted August 2, 2016 I've just inherited some money in the UK (about £20k) but am living in Australia, and will be for the foreseeable future, even if not for ever. I have a mortgage in the UK. However the interest rate is only 1% (and it doesn't look like going up any time soon), so I'm looking at ways of getting a better return on the money rather than just paying off a chunk of the mortgage. As the Exchange rate is so poor, it's not worth bringing it over to Australia at the moment (which is a shame, as my mortgage interest rate here is 4%) As I'm not a UK resident, I can't open any UK based ISAs or other accounts that may have reasonable introductory offers (and the 'standard' rates that they offer are pretty much 0%) I've not invested in stocks and shares before, but maybe that's an option? Will not being a UK resident cause any issues for this type of investment? Or any other ideas about how to get a better return than the mortgage option? I have dealings with an Oz company that has launched in the UK and offers investors somewhere between 8 and 12%, I can pass their details on to you if you are interested, simply PM me Link to comment Share on other sites More sharing options...
winter1 Posted August 17, 2016 Share Posted August 17, 2016 I have dealings with an Oz company that has launched in the UK and offers investors somewhere between 8 and 12%, I can pass their details on to you if you are interested, simply PM me That sounds incredible and may be a good investment particularly in the current climate, but I work on the principle that if something sounds too good to be true then it probably is. Link to comment Share on other sites More sharing options...
Parley Posted August 17, 2016 Share Posted August 17, 2016 Yes I think his name may be Charles Ponzi. Link to comment Share on other sites More sharing options...
Fisher1 Posted August 18, 2016 Share Posted August 18, 2016 I lived outside the UK for 24 years and had all the same problems with banking that you describe. At the beginning it was fine, we could open an account anywhere, but it just got more and more impossible as time went on. The only way we managed to get a new UK account was with Lloyds when we told them we were coming back to live. Be aware that it is equally difficult to get a new mortgage if you live outside the UK, so I wouldn't pay your UK mortgage off or try to move it to a new property. Have you thought about an offshore sterling account? Although I don't suppose the interest will be any better .... Premium bonds? You're allowed to buy those! Link to comment Share on other sites More sharing options...
Richard01 Posted August 18, 2016 Share Posted August 18, 2016 That sounds incredible and may be a good investment particularly in the current climate, but I work on the principle that if something sounds too good to be true then it probably is. Maybe, I've been enjoying 15% for the past 9 months, lets see how long it lasts, although 8% is guaranteed as it has contacts in place already, its now CLOSED to investors as they are over-subscribed, so I am now realising that if you sleep on legit businesses you lose out Link to comment Share on other sites More sharing options...
Keith and Linda Posted August 18, 2016 Share Posted August 18, 2016 I lived outside the UK for 24 years and had all the same problems with banking that you describe. At the beginning it was fine, we could open an account anywhere, but it just got more and more impossible as time went on. The only way we managed to get a new UK account was with Lloyds when we told them we were coming back to live. Be aware that it is equally difficult to get a new mortgage if you live outside the UK, so I wouldn't pay your UK mortgage off or try to move it to a new property. Have you thought about an offshore sterling account? Although I don't suppose the interest will be any better .... Premium bonds? You're allowed to buy those! We are buying some premium bonds at present, but only in the wife's name as she had a single one pound bond from 1961 which meant we could start the on-line process of buying. It was/is far too complicated for me to get an account open. Also the bonds are not included in draws until after one month after the month in which you buy them, so if you buy them in August (now) you will be in the October draw. Link to comment Share on other sites More sharing options...
Fisher1 Posted August 18, 2016 Share Posted August 18, 2016 We are buying some premium bonds at present, but only in the wife's name as she had a single one pound bond from 1961 which meant we could start the on-line process of buying. It was/is far too complicated for me to get an account open. Also the bonds are not included in draws until after one month after the month in which you buy them, so if you buy them in August (now) you will be in the October draw. You're right, it is complicated from abroad if you don't already have an account. I don't know why the UK banks are so neurotic ... I was once asked to produce I. D. To exchange foreign currency. When I asked why, they could t tell me, just kept saying it was 'the rule'. Ridiculous. Link to comment Share on other sites More sharing options...
Parley Posted August 18, 2016 Share Posted August 18, 2016 We are buying some premium bonds at present, but only in the wife's name as she had a single one pound bond from 1961 which meant we could start the on-line process of buying. It was/is far too complicated for me to get an account open. Also the bonds are not included in draws until after one month after the month in which you buy them, so if you buy them in August (now) you will be in the October draw. Is that gambling like Th Pools ? Link to comment Share on other sites More sharing options...
winter1 Posted August 18, 2016 Share Posted August 18, 2016 We are buying some premium bonds at present, but only in the wife's name as she had a single one pound bond from 1961 which meant we could start the on-line process of buying. It was/is far too complicated for me to get an account open. Also the bonds are not included in draws until after one month after the month in which you buy them, so if you buy them in August (now) you will be in the October draw. You may already have seen this but it is still interesting. http://www.moneysavingexpert.com/savings/premium-bonds-calculator/#result Link to comment Share on other sites More sharing options...
scuffythetugboat Posted August 18, 2016 Share Posted August 18, 2016 Spend it. You're worrying too much. Link to comment Share on other sites More sharing options...
Keith and Linda Posted August 18, 2016 Share Posted August 18, 2016 Is that gambling like Th Pools ? Nope! no skill or knowledge involved. Link to comment Share on other sites More sharing options...
Keith and Linda Posted August 18, 2016 Share Posted August 18, 2016 You may already have seen this but it is still interesting. http://www.moneysavingexpert.com/savings/premium-bonds-calculator/#result Yes I had, but I cannot, even with my UK HSBC bank, as a non-resident, open up any new savings account so my money is earning for all intents and purposes ZERO. So even if I do not win on the premium bonds I have not lost anything but definitely have a chance of some gain. Link to comment Share on other sites More sharing options...
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