Use ISA for One Off Mortgage Payment?

Teddy_KGB

Hi,

I currently have a Northern Rock together mortgage with just over 2 years left of a fixed 6.89% rate. This mortgage has the option to borrow back any payments made on my secured mortgage of £59,490.42, with payments made to the unsecured loan of £3,153.64 not being available to barrow back.

I have been looking to transfer my cash isa of £4,200 to another isa but the interest rates are not very good at the moment. So I was thinking would it be better to just withdraw the money from my isa and use it to pay off the mortgage? I would still have the safety net of the borrow back money from Northern Rock should I lose my job etc.

Any advice would be appreciated.

Thanks

Teddy

getmore4less

ISA is use or lose so if you are filling every years allowance might be worth keeping.

If not overpay the mortgage and consider using ISA allowance this year

If you have to ask for the money back then make sure you have an emergency fund in case they refuse

chirpchirp

I would normally say keep the ISA but as your interest rate is so high, I think in your circumstances I would use the money in the ISA towards the mortgage. In effect this will give you a tax free amount for the lifetime of the mortgage as you won't be paying whatever interest your mortgage is on at any given point on that £4000+.

However, I'm taking it that this is your emergency fund too as you talk about borrowing back if need be. Make sure you are comfortable with how long it could take for a mortgage company to process any borrow back money.

Teddy_KGB

Thanks for the replies, the interest I would save would be huge compared to anything I would receive in an ISA. It is my emergency fund so it would leave me in the hands of Northern Rock as to weather they would allow me to borrow the money back.

Has anyone had any experience of them allowing the overpayments to be used instead of the monthly repayment in the event of an emergency? I know they offer payment holidays, but that would only be a couple of months I would imagine?

mjm3346

Using it all would leave you at the mercy of Northern Rock, might be worth keeping back say 1K in the ISA just in case.