Anyone else recently taken out an ISA mortgage ?

freestyle_3

I have almost signed on the dotted line with my broker to an ISA mortgage.

He says, that his daughter has just got one. And that now is a good time.

I am aware of the risks, but over the length of time we are talking about it should come out ok.

He is advising on getting stock in Asia, Japan and other far off places.

He's thinking is 'get the money of this country' pound goes down. Then buy back into the UK market.

Anyone got any reading material on this topic or opinions?

dunstonh

Its a very very risk strategy. The potential to make money above and beyond is very high but the potential to run short is very high too.

Basically, he is recommending the equivalent of an endowment policy but in a more tax efficient and cheaper manner.

It would be wrong to fault the advice as its exactly what I do for my own personal mortgage and I have made far more than I would have done on repayment mortgage. However, I don't think I would go there with any of my clients unless they were totally clued up to investments and understood exactly the pros and cons and knew about sector allocation investing etc

Ian_W

freestyle wrote: I am aware of the risks, but over the length of time we are talking about it should come out ok.

Hmm. That's what those of us who bought endowments thought or were lead to believe. :rotfl:

A good thing for the advisor now is that you won't be able to claim compensation for misselling in the future as you know there is a risk that the ISA's alone may not repay your mortgage at the end of the term. You know there's a risk, so why take it? If your mortgage is due to be repaid just after a Stock Market crash like we experienced a couple of years ago you'll be in a similar boat to those posting about their endowments now.

Don't forget when they took them out there was a long time to pay also but things went very wrong for them. Your call but I certainly wouldn't ignore dunston's comments, he's a lot more financially savvy than me and sees it as risky for his own clients.

Someone's signature on these threads is along the lines, "learn from the mistakes of others, you won't have time to make them all yourself" - just count how many posts on this thread are about endowment issues, learn from their [and my] mistakes!

dunstonh

To add further, I have only 2 clients on ISA/OEIC linked mortgages. Both are well up but we did much of it at the right time and in a structured portfolio with 6 monthly rebalancing and over 30 funds in one case. Both have significant other investments and understand the concept of gearing. The bulk of both of them has been single premium and not regular.

It's something for the professional investor is I guess what I am trying to say.

It really isnt for the novice or someone who cannot afford the potential loss. Sure, you could get bucket loads of surplus and you would be chuffed to bits if it did. However, how would you feel if you were 30% short at mortgage redemption.

If i was to put a risk scale of 1 to 10 on it, I would say you need to have the mentality of risk 11 to do it!!!

freestyle_3

Thank you both.

I don't know anything aboutut
sector allocation investing

But broker will help, and 'net will provide further reading. Any info to share on this or websites please let me know


Yes it's similar to an endowment. After doing research on endowments, it seems a lot of people who got compensation of say £10K simply were taking the wrong option.

Those few people who decided to keep their endowments, will be far better off than those of you (Ian being one possibly)

Not wanting to start an endowment row. But I think a lot of the lenders are happy to get rid of them.

To prove it, got and try to let a life assurance policy today that's anywhere near what you may have had before with the endowment.

Oh and don't forget sickness cover...