Overpay the Mortgage or into an ISA + what is the 06/07 ISA allowance?

Financial_Savvy

Hi,

My personal circumstances - I have a stooze pot of about £1400 on 0%, soon to be moved to another Credit Card with 0% and no Balance Transfer fee.

I have a mortgage where I can overpay each month up to £500.

I have a mini cash ISA, and haven't yet put a penny into the 05/06 allowance, as I have been overpaying the mortage...

Question:
1. Do I continue to overpay the mortage (5.09%) or pay into a cash isa (4.65) with the funds on the credit card costing me no interest.

What is the 06/07 ISA allowance?? Is it still 3K?

Thanks all

YorkshireBoy

Financial_Savvy wrote:

1. Do I continue to overpay the mortage (5.09%) or pay into a cash isa (4.65) with the funds on the credit card costing me no interest.

As long as you have a reasonable level of savings in your ISA, you're probably better off overpaying the mortgage. Although bear in mind the benefits of compounded interest in the years to come with ISA's, which will run until 2010 (?) at the earliest.

However, there are better rates around on both products. Our mortgage is =BOE (4.5%) and our Halifax Direct ISA's pay 5.0% so I fill our ISA's first and then overpay the mortgage with what's left.

Financial_Savvy wrote:

What is the 06/07 ISA allowance?? Is it still 3K?

Yes.

canny_yorkshireman_2

depends on if the mortgage is calculated on a daily basis or yearly if the latter then put the overpayments in the isa then transfer it on the last working day of the mortgage that way you benifit with intrest on the savings and maximise benifit on your future mortgage intrest.
As far as I know the allowence is unchanged at 3K per year till 09