ISA Transfer or Mortgage pay-off

LiamD_2

I often hear on the radio Martin giving advice as the the best use of money. I hope to get some advice from the forum.

I have £6000 in a cash ISA (RBoS), the interst is rubbish and I want to move it.

My thoughts are to either :
1) Move to another cash ISA
2) Overpay on mortgage

I have £40,000 left to pay on the mortgage which is a Life-Time Tracker, 6 years remaining and current interest rate is 1.5%

I may still need access to the cash over the next few years.

What is the best advice in how to use my £6000 savings.

Thanks,
Liam

samizdat

Move to another cash ISA paying more than 1.5%, say Nationwide, Birmingham Midshires or Cheltenham & Gloucester, or anyway one that allows relatively quick access to your money, so that if rates go up you can reassess the decision.

Provided you are prepared to keep an eye on rates and switch ISAs whenever your rate falls behind your mortgage rate, you should be able to make money by keeping your funds in an ISA relative to your position if you pay off your mortgage.

Furthermore, you will retain access to the funds, which is an advantage unless your mortgage provider would allow you to re-borrow the overpayment on the same terms as your current mortgage.

If you aren't prepared to keep an eye on interest rates and your ISA's competitiveness, then keeping the ISA will probably cost you money over the long term and the decision just depends on the access to funds argument (see above paragraph).