Overpay or fill my ISA ?

woollyjumper

I have a £6k in my ISA - earning 5%

My mortgage is fixed rate running at 4.75% - 19 years left to run outstanding balance around £100k - interest is paid daily.
In the mortage terms any amount I overpay I can get withdraw the money if i really need (ie. for an emergency), so is not totally lost in the mortgage pool.

Am I better putting this money to reduce the debt or will I make more money in the ISA ?
Are there any calculations that can help me with this ?
Common sense says overpay - but just wondered.

TIA

Woollyjumper

zag2me

I think you will make more money with the ISA, especially as its a yearly allowance, if you dont fill it, its lost forever. The difference is negligable though.

The way I do it is fill my isa every year, and any extra money goes into overpayments on my mortgage.

woollyjumper

The basis is look at the APR on the mortgage not the interest rate.
My APR on my mortgage is 6.3% and the best ISA will give you 5% APR -
so I am better off paying into my mortgage... I have a £5K limit on overpayments - but should be better off when I remortgage in 2 years time.

I am working on an excel spreadsheet - that will show savings when you do overpayments and amount saved. Found plenty that give full payment details but not easily show overpayments and the value after 2 years (ie. when I want to re-mortgage). This can then be compared to a saving account or ISA and see the different over the term.

I know we told to use our allocation on ISA - but if you can get the overpayment back if required then do so.. The only choice is when you remortgage, the mortgage current loan value and is less; but you will not be able to get at the overpayments ( unless you withdraw your overpayments on your old mortgage - then reapply to the new one).

Unsure if that is more questions than answers !