Paying smaller mortgage vs. holding onto Index tracker ISA investment

savingsguy

Hi there,

I've been investing in a Santander Stockmarket 100 Tracker Growth for the past 7 years - 20% growth as the markets recovered!.

I've seen this as a long term investment that I didn't want to touch, however at the moment I'm about to apply for a mortgage.

I trying to weigh up which is more sensible. Borrow the least amount of money and I can and pay off a smaller mortgage which means cashing in my ISA
OR
Keeping my ISA and having a larger mortgage paid off over a longer period? Borrowing is cheap at the moment, but would like less debt.

Any advice or thoughts would be greatly appreciated.

All the best
Savingsguy

Cannon_Fodder

How borderline is your income, in relation to the likely repayment of the larger mortgage scenario?

If it is remotely borderline, imo, you do not want to risk being forced to dip into your ISA, potentially at times out of your control - it could coincide with a dip in share prices. So the smaller mortgage could be a good idea.

Would the ISA money allow you to drop down a Loan-To-Value threshold, i.e from above 75% to under, and therefore not only reduce the overall mortgage but also improve the interest rate being charged. Double whammy in a good way.

Although, the usual recommendation to hold 6 months savings for emergencies still applies, and your ISA could form part of that.