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Standard MIRAS Assumptions

We are in the process of making a claim on our endowment mortgage, an

have received an offer from Standard Life. One of the 'assumptions they have used is that our loan was subject to MIRAS, although the have offered to recalculate the offer if we can show that the loan wa outside of MIRAS. This assumption seems to have been one insisted upo by the FSA, from what I have managed to find out so far...

My question is, if our loan was outside of MIRAS, how would that affec the offer from Standard Life? Would it result in an increase, or decrease, to the offer? Can anyone help?

Thanks in advance for any assistance you can give

Reply to
abertawe62
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MIRAS was income tax relief on the interest paid on a mortgage.

In certain circumstances it could have been advantageous to have paid more interest for the duration of the loan (with a net reduction due to MIRAS), save up the capital in a tax-preferred savings scheme and use the proceeds to pay off the capital in one go at the end.

Once MIRAS goes away the effective interest rate paid on the outstansing mortgage is higher, hence the assumed rate of growth of an investment vehicle would have to be higher to leave you with the same outcome.

To put it another way, if an endowment was a marginal decision assuming MIRAS applies, when you remove MIRAS the scales tilt towards capital repayment.

Reply to
Neil Jones

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