Mortgage or ISA??

linzdelene

Hi, just after some advice on what best to do. Questions is simple - should we invest in another cash isa or put in an overpayment on mortgage.

Our money was tied up in a cash isa in Iceland which we now have sitting in our bank acount.

Our mortgage is roughly £155000 - currently paying £1060 pm. We make overpayments of £500 each month. On a fixed at 6.18%.

Best cash ISA is probably about 3.5-4%.

We would like to do something with £10000.

Should we make a lump sum on the mortgage? If so to reduce term or monthly payments. What is the best option.....!! Should we put into savings? We have a sum of money set aside for emergencies.

Help much appreciated....

sloughflint

That's a high fixed rate. Certainly the rates would suggest putting it into the mortgage and reduce the term a bit but of course you would both be losing just over a year's tax free allowance.

On balance, I'd overpay I think.

tradetime

Personally I would overpay the mortgage in that situation, no question, as long as you have some rainy day money set aside..