To Repay or Not?

colinupton

If I have savings in a not very good account, would I be best to open an ISA or repay part of my Mortgage?

nh

It depends what the interest rate on your mortgage is.

The best ISAs pay about 5.5% (but check ISAs board for the best deal) so if you pay less than that on your mortgage then it is better to put it in an ISA. You can only put £3000 a year (April-April) in an ISA though so it depends how much you have got saved.

With ISAs, you have to keep checking you are getting a good rate, because conpanies will lure you in with a good rate but then drop it to something rubbish after a year or so.

If you are on more than 5.5% for your mortgage you should think about remortgaging! The best rates at the mo are below 5% (discount/trackers).

Also, consider whether you are going to need the money in the future. If you pay off your mortgage you may not be able to get that money back, but if you put it in an ISA you will have access to it.