Use ISA for deposit?

geekinheels

Hiya
My husband and I are potential first time buyers. We're interested in buying a property worth around 360k.
We're able to come up with 80k deposit from regular saving accounts and by selling some shares. this gets our deposit to be over 20% but not quite 25%. We have more savings but the remaining savings are in ISAs.

My question is, generally, is it worth taking money out from ISA to make up a bigger deposit (e.g. 25%) to qualify for better deals? Or are we better off keeping our ISAs?

I realize this may be purely case-by-case basis and I'll need to crunch some numbers to find out, but just wondering if anyone has a general feel for this.

Any thoughts are appreciated.

Thanks,
geekinheels

poppy10_2

Really depends on the difference in mortgage rates between a 80% and 75% LTV, and how much interest you are earning on the ISAs. Impossible to say which is better without this information.

dimbo61

there seems to be alot more 75% LTV mortgages than 80% LTV so check out a few websites and go for the best one to fit your needs

northerner999

I think it depends entirely on the property your'e buying and what it'd mean to you.

If adding your ISA to a deposit ensures you can buy the property, and it is the property for you, then I'd use it. I wiped out my ISAs to purchase my flat and have no regrets - though I'd only advise this if you've got a reliable source of income to build up savings again after purchase and all the costs associated with it. I was lucky to land a new job that substantially increased my wages a year after purchase, but you obviously cannot plan for that. Like you say, it's a case by case basis and you've got to balance it out -we don't have info like your ages (I am in 20s so have hopefully many more years of saving to look forward to).

So long as your mortgage payments are affordable so that you have money spare at the end of each month, I'd be very tempted to do it. Proviso is that after completion any spare money goes into topping up savings (we're nearly at start of new tax year, so between you and hubby you've a 10K allowance over the next 12 months) you can rebuild savings quickly.

geekinheels

Thanks everyone for the advice. We're in our mid-20s and likely to progress in career so building savings in the future shouldn't be a problem.
My ISAs are earning less than 3% rates at the moment, and the mortgage deals I've seen seems to be at least 4 or 5%, so it seems that we'd be better off putting down ISAs as deposit.

chapati_monsta

The other thing you may want to think about is having some liquid cash to do all the things which come with house purchase - a bit of redecorating, moving costs etc... as well as having a rainy day fund! Think having a big a deposit as possible is a good idea (getting to 70% LTV would be even better than 75%, as Nationwide, Santander and a few others offer their best rates to 70%), but I would always keep something back for the 'just in case' moments!

geekinheels

chapati_monsta wrote: »

The other thing you may want to think about is having some liquid cash to do all the things which come with house purchase - a bit of redecorating, moving costs etc... as well as having a rainy day fund! Think having a big a deposit as possible is a good idea (getting to 70% LTV would be even better than 75%, as Nationwide, Santander and a few others offer their best rates to 70%), but I would always keep something back for the 'just in case' moments!

Definitely important to have a rainy day deposit! I guess we'll have to see exactly what price we get on the house and then budget from there, but definitely aim to have as big a deposit as possible. Thanks for the comment:T