Pay off Mortgage or invest in ISA

--Tony--

With a rate of 4.9% on my Mortgage and ISA's available @ 5.2% am I better off not paying off some of my Mortgage and putting the money in an ISA or am I missing something?

Thanks Tony

BACKFRMTHEEDGE

Me and my OH are pondering this one too.

stanmoresaver

--Tony-- wrote:

With a rate of 4.9% on my Mortgage and ISA's available @ 5.2% am I better off not paying off some of my Mortgage and putting the money in an ISA or am I missing something?

Thanks Tony

Simply put- i feel you are, and furthermore,i feel there is merit in the debate that, even if your ISA rate was a little lower than the mortgage rate, for the sake of cashflow, it would still be worth keeping some of the cash "liquid".

Hope this helps

SS

BACKFRMTHEEDGE

Thanks Stanmore that helps me alot, we've been offered a 4.99% tracker rate and can get 5% on our cash ISA.... so you think we should leave the money in the ISA?

michaels

I have just uppe dmy mortgage at 4.25 tracker and put the proceeds into cashfree accounts (isa and wifes name) paying 5.2/5.15/5.1% - giving me a net income of 0.8% on about 50K - not bad methinks - especially as the mortgage fixed costs were the same whether I borrowed this amount or only what I needed...

The_Geek

I have just uppe dmy mortgage at 4.25 tracker and put the proceeds into cashfree accounts (isa and wifes name) paying 5.2/5.15/5.1% - giving me a net income of 0.8% on about 50K - not bad methinks - especially as the mortgage fixed costs were the same whether I borrowed this amount or only what I needed...

Can someone explain to me how this works? I thought you can only put £3k a year into a mini cash ISA. So how can you put £50k into it?

stanmoresaver

BACKFRMTHEEDGE wrote:

Thanks Stanmore that helps me alot, we've been offered a 4.99% tracker rate and can get 5% on our cash ISA.... so you think we should leave the money in the ISA?

Unless there are any other facts i am not aware of then yes- check out early redemption penalties and penalty free capital repayments to ensure that it the difference swings the otherway then you can get some if not all of it back


SS

--Tony--

stanmoresaver wrote:

Simply put- i feel you are, and furthermore,i feel there is merit in the debate that, even if your ISA rate was a little lower than the mortgage rate, for the sake of cashflow, it would still be worth keeping some of the cash "liquid".

Hope this helps

SS

Thanks stanmoresaver, I thought I must be missing something in the way they calculate the interest as everyone always says its better to pay off your mortgage in favour of savings.

My mortgage is fixed at 4.9% for a bit longer yet (I can pay off a small amout each year without penalty) so will stick with the ISA until my fixed rate ends and I re-investigate the situation.

Thanks.

michaels

The_Geek wrote:

Can someone explain to me how this works? I thought you can only put £3k a year into a mini cash ISA. So how can you put £50k into it?

Sorry - didn't make it clear - funds are either in isa or in wifes name who doesn't work at the moment (paid work - she is full time looking after 2 daughters 21 months and 2 months) so has a tax allowance to use up.