Overpayment or Cash ISA?

Whitters03

Hi

Looking for some advice please on what to do with my mortgage.

I have a tracker mortgage on an interest only basis at present. I am now in a position to throw some extra cash at the mortgage on a monthly basis but would like to know if it's best to put the money into a Cash ISA and then pay it into the mortgage at the end of our fixed term (2010) when we'll more than likely move mortgages, or to pay it off monthly as an overpayment which the terms of the mortgage allows?

We have a tracker mortgage at base +0.98%.

Your advice is much appreciated!

Thanks
Whitters

lisyloo

It's better to put it into an ISA and keep it there.
There are 2 reasons.

1) simply that you can get better ISA rates
2) they are tax free for life whereas your mortgage overpayments are tax free for term

only risks are
1) you need to review rates now and again and swicth ISAs if necessary
2) governement legislation can change (but this is benign because you would still have thje cash even if the future benefits stops).

So my vote would be put it in a ISA but leave it there and pay off the mortgage in your normal timescale.