Topic 18 - Other Repayment Vehicles for Interest-Only Mortgages Flashcards
Characteristics of an ISA mortgage:
- Interest due on the loan is paid during the term.
- Separate life cover is needed to repay the loan should the borrower die.
- ISAs can be cashed in at any time without penalty.
What is the overall ISA limit?
£20,000 per year.
Stocks and shares ISAs are available to those aged 18 or over. Is it the same for cash ISAs?
No, these are available to those aged 16 or over.
The ISA holder can withdraw cash held in the account and re-invest it in the same tax year without it counting as part of that year’s contribution allowance. True or False?
True
Lifetime ISA can be opened between which ages?
18 and 39.
How much can be deposited each year in a Lifetime ISA?
Up to £4000. A 25% bonus is credited on this.
What is the maximum cost of a house that can be funded through a lifetime ISA?
£450,000.
What happens when an ISA holder dies?
The surviving spouse can claim an additional permitted subscription. This allows their own ISA allowance to be increased by the higher of the value of the deceased’s ISA fund at the time of their death or its value when the allowance is claimed.
Annual allowance for tax relief for pensions
£40,000.
It is possible to carry forward allowances from the previous three tax years to the current year.
What is the lifetime allowance (LTA)?
The maximum that can be held in pension funds by an individual at the point when they take benefits.
It is £1,055,000.
If the funds exceed it on taking benefits, there is a charge.
Three options for those wishing to take benefits from their pension pot:
- Uncrystallised funds pension lump sum. Only 25% of each lump sum is tax-free.
- Flexi-access drawdown. Most efficient way of providing the required lump sum.
- Annuity
Funds are locked in a pension until what age?
55
