ISA question - cash it in or not?

Julesxx

Hi

Newly registered - dumb question to follow!

Forgive me, as I really don't have a clue about this!!

Ten years ago I started paying into an ISA which is called 'Legal & General Mortgage ISA UK Index'

I pay £215 per month. This includes critical life cover for £90k.

I have been told that it is currently worth £25k

From my perspective this ISA does not appear to be a good product anymore - this is the first time I have revisited it really!

I want to pay a big chunk off my mortgage. I will in the New Year be getting over 100k to use as well.

Question - Am I correct in thinking that as this is as stocks ISA I can only move it to another stocks ISA?

Question - If so would I be better off cashing it in and start up some cash ISA's each year for myself and wife. (I think I would rather have a cash ISA and more flexibility as my confidence is not strong in the stocks ISA's)

or should I go to a IFA!!

Your opinions please.

Many thanks

Jules

talexuser

ten years at 215 a month is £25,800, so if it's only worth 25,000 I can't see how it was linked to a UK index unless all the profits have been taken in charges or you have an early redemption penalty that takes all the profits... On those figures the money would have been better off in a Building Soc?

Cash Isas would give around 2.8% net now and you could put in £5100 each per tax year but would have to keep a monthy eye on rates and probably have to move at least once a year to keep ahead of the bonus offers and rate reductions.

You can't move a stocks Isa into a cash Isa, only start a cash isa with new money, although stocks Isas do have money holding facilities, they are meant for short term and have no or miniscule interest as far as I know.

Paying off the mortgage is the first step I would say.

Julesxx

talexuser wrote: »

ten years at 215 a month is £25,800, so if it's only worth 25,000 I can't see how it was linked to a UK index unless all the profits have been taken in charges or you have an early redemption penalty that takes all the profits... On those figures the money would have been better off in a Building Soc?

Paying off the mortgage is the first step I would say.

Yes. I should have stuffed it in the mattress! I think I was naive and also the Critical Illness cover + expensive set up charges have eaten into the value.

My 'simplistic' approach is to cut and run and pay off some of the mortgage as you suggest. After all, debt is debt!

I want to make sure I am better informed this time around than I was 10 years ago!

Thanks for your reply

talexuser

If you do transfer some of the ISA (after mortgage) into other self select (better performing) funds make sure to use an intermediary who will pay back ALL the initial commission, around 5% usually, otherwise this money is lost. Some will take a small initial % themselves but others pay you back all to increase the size of the fund. Some will also give you a cut of their annual commission if they do nothing but hold the funds for you.

I have stock funds in a wrapper like CoFunds and FundsNetwork which makes changing very simple, relatively cheap, and keeps paperwork and valuations manageable.