How ‘linking’ facilities can benefit you

Our following example illustrates the operation of the two different options.

Under Option 1 whenever your St. James's Place Bank savings and current account are offset against your offset mortgage, the interest saved is equivalent to it being earned on a gross basis with no tax liability. Under Option 2, the interest actually received is taxable as income.

Of course, under Option 1, linking your facilities in this way reduces the cost of your borrowings but, you forgo the interest on part or all of your St. James's Place Bank savings. Whereas under Option 2, you maximise the interest payable on your St. James's Place Bank savings, although this is taxable, but get no reduction in the cost of your borrowings. You are free to choose the option which works better for you.

Now let's look at some practical ways in which you can benefit.

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