savings? isa? or pay off mortgage?

the_saint_7

I recently remortgaged,(using the MSE booklet for advice) and greatly reduced my monthly payments, because of this I borrowed an extra £4000 to pay off a car loan, my mortgage is interest only and will finally be paid off in four years time, I have endownment policies to cover the initial loan but not the £4000, having paid off the car loan I am now better off by £200 a month and would like to save about £100 a month towards paying off this extra £4000 over the next 4 years, my question is would I be better off paying an extra £100 a month off my mortgage or starting some sort of savings sceme, if so what sort of savings should I start.
Any advice would be warmly welcomed.
thanks dave.
ps mortgage rate is 4.99% fixed

grumbler

At least you should tell what your mortgage rate is ...

the_saint_7

hi, thanks for taking the trouble to read my message, yes you're right I knew i would leave some vital onfo out, my rate is 4.99 fixed.

grumbler

Well, best ISA now is 5.15% with A&L. You will be slightly better off and have more flexibility if you save money in ISA instead of paying off the mortgage. Also you can make a little extra by using regular saving accounts. See my post #2 in today's Saving For Driving Lessons/Car thread.
4.99% looks like a flexible mortgage: I assume that you have flexibility with repayments if, for example, saving rates drop below your mortgage rate.

Edit: in fact A&L ISA rate is 5.2%, not 5.15%