take a loan or cash an isa?

docshelford

Hi,

we are currently looking for circa £25k for a discretionary purchase. We have a 100% share ISA to this value. Not sure whether we should i) take out an unsecured loan (don't want to consider a secured loan and we have no other borrowings) or ii) cash in the isa and make payments back into it similar to the loan payments would have been.....

guess advantage of caching the isa is that should anything go wrong (e.g. loose our jobs) then we don't have to find the money every month, against the gamble that its value would have increased more than the interest payments on the loan.

My philosophy has always been don't borrow unless you have to....but not sure how wise this is?

any thoughts?

BenL

Do you think the share ISA will increase in value by more than the interest rate? Hard to say on that sort of product though.

I had a similar but simpler situation so it was easier for me to decide.

Cash ISA paying 3.21% and MBNA would super balance transfer me £5000 at 1.9% with no fees.

If the worst happens I can dig into the ISA to pay MBNA back.

The difference moneywise isn't that big for me but the fact i could not replace the ISA money tax free was a little concern.

tasha-debt

Maybe do 50/50, borrow £12,500 and take the same from your ISA. This way you still have money in their should you ever need it such as if one of you lost your job.

Then re-pay the loan and the same amount in to your ISA each month.