I know Im silly BUT....

wuzzbert

This is my situation:

10k in ISA (1.30%)
21k in savings (1.03%)
Earn 35K a year and am Single

44k owed on mortgage (4.74% flexible, interest calc daily)

What should I do to get the best out of this?
Thanks

MrC-117

ISAs divide opinion a bit on here as you're not really getting a lot of interest on them at the moment, but long term they're tax free so when rates are better you might regret it if you lose them. If I was you I wouldn't take the money out of the ISA

Shift some of that 21k into something else (ISA or mortgage) as it's a low rate and taxed. Nat West & Bank of Scotland do a resonable rate of about 3-3.5% at the moment which you can transfer the ISA into to get a better rate.

If you're allowed to by the terms of the mortgage it's worth paying off some of it, but it's always good to have some spare money so don't put it all in.

So that would leave you with

- £13,600 in an ISA paying around 3%
- Put another £3600 into an ISA in a few weeks when it's the new tax year, giving you £17,200 in ISAs
- £10,000 in the savings.
- £40k left in the mortgage after you've paid some off.

Something like that would be an improvement anyway

alastair_h

Personally i'd do something like..

1. Move your ISA to an ISA paying a decent rate (or if you can tie the money up consider fixing the rate), see attached. Transfers In and Fixed Rate sections, you should be able to get between 3 and 3.51% at present.

http://forums.moneysavingexpert.com/showpost.html?p=4603369&postcount=1
or
http://www.moneyfacts.co.uk/money/savings/7/fixed-rates-isa.aspx

2. Transfer savings into better paying Savings Account, again around 2-2.4% should be possible. You may also want to consider a fixed term bond or similar for part of this.
http://www.moneyfacts.co.uk/money/savings/6/instant-access-savings-accounts.aspx

3. I would definitely consider starting to overpay your mortgage (not lump sums increasing payments by standing order etc, you can get penalised by paying off lump sum with admin charges.). By repaying my mortgage 11.5 years early saved around £12k in interest payments alone.

MrC-117

Also might be worth looking at other mortgages to see if you can make any savings there. I would say pay more of it off, but I always like to have a good amount of savings so it would make me a liar if I said I'd pay more off!

Mikeyorks

wuzzbert wrote: »

What should I do to get the best out of this?

Read your own figures ... and you don't need a crystal ball!

If you're allowed by the Mtge terms .. and without severe penalty .... pay a minimum of £25k off. Then continue to overpay significantly.

You're already paying a massive penalty by having debt at over 400% more than your savings ..... so invert it. But then continue to repay the Mtge by at least your current payment.

Different story if you'd read the runes late last year and tied savings up at 7%? But you didn't ..... so invest in a large chunk at 4.74% if the T&Cs allow it.

littlemrtinkle

transfer isa to halifax 3 %

pay rest off mortgage as long as penalty is not too high

sabretoothtigger

Ive seen better then 4% for over fifties, I think 3% is beatable

shrewsaver

If I were in your situation, I would do what MrC-117 said in his first post i.e. put £7,200 into ISA either side of the tax year but also shop around for a better paying ISA.

Leave £10k in an easy access saver so it is easy to get at and pay the rest (£3,800) towards the mortgage.

Also, by my calculations you probably get paid around £2,750 a month so I would probably overpay the mtge £500 - £750 each month (if it is allowed and doesn't cost you). Also, search for a good paying regular saver where you can put £250 a month away.

That would leave you with £1,750 - £2k to live off each month.

Valli

enough to take me out;)

sabretoothtigger

If it isnt allowed I would give the bank a call anyway as I believe many would welcome overpayment at this point

barny_100

shrewsaver wrote: »

Also, by my calculations you probably get paid around £2,750 a month so I would probably overpay the mtge £500 - £750 each month (if it is allowed and doesn't cost you). Also, search for a good paying regular saver where you can put £250 a month away.

That would leave you with £1,750 - £2k to live off each month.

I earn the same amount and after tax and NI (+ Student loan for me) they certainly don't get paid £2,750 into their bank!