is this a good idea?

webitha

hello to all here this is my first post so please be gentle
anyway am now debt free after 3 years and £9k debt left by ex (bless him)
and me and DH have been putting around £100 an month in an ISA and at the end of the year when our interest is calculated we pay off a lump sum which is shrinking our mortgage, but i need to know if this is the best way or is another account better but we do need to get access to the money just in case.
we will be able to put more aside to be MF in about 12 months when DH debts are finally paid, so any ideas or do we just keep doing what we have been?

cupid_s

We cannot pay much extra off our mortgage at the moment as it is fixed. So we're saving as much as we can in a regular saver. We are getting 10% interest but you cannot access the money. If you really need instant access I think an ISA is best. Or maybe you could split the £100 and put some in an ISA where you can access it and some in a regular saver where the interest is better

Annando

Lloyds have a regular saver account that you can access instantly if need be, it pays 8%, however if you do need to take out money, whatever you took out you cannot put back in, you can save between 25 and 250 a month, only one deposit allowed pcm. When you open the account you can put in a lump sum of maximum 500.

David_B_2

cupid_stunt wrote:

We cannot pay much extra off our mortgage at the moment as it is fixed. So we're saving as much as we can in a regular saver. We are getting 10% interest but you cannot access the money. If you really need instant access I think an ISA is best. Or maybe you could split the £100 and put some in an ISA where you can access it and some in a regular saver where the interest is better

Be careful with ISA's because it's tax free (unlike others) and you can't put back what you have taken out once you've gone over your yearly allowance.

Therefore once you've used your entitlement, that's it is gone!

Splitting is a good idea, putting some in a ISA for a long term saving and else where for mortgage payoff.

That's my view anyway, each to their own but hope it helps a little.

webitha

we already have a savings acconut which now as im debt free is growing quite nicely , and we havent needed to access our isa throughout the year b4 but its nice to know that the option is there if need be, and as a treat we spend the interest on a slap up meal out then put the rest in high interest saving account

jamesd

How do the interest rates on DH's debts compare to the interest rate on the ISA? What are the costs for repaying his debts early? Chances are that your most money saving option is to pay off his debts first, particularly if they are credit card debts or you have credit cards available for your emergency money if you do find you need it.

webitha

no credit cards for either of us, i made sure that that was the first debt to be got rid, of his debt is a bank loan with penalties for early repaymentwhich i already looked into so theres no point as it is easily affordable, bank loan and mortgage is now the only debts we have, hurrah for us when we met i was £9k and him £14 so in three years of my money saving and this is all we got, (big pat on my back) as he has succumbed to my nagging lol and also stopped wasting money he now more miserly than me

afro_2

webitha wrote:

we already have a savings acconut which now as im debt free is growing quite nicely , and we havent needed to access our isa throughout the year b4 but its nice to know that the option is there if need be, and as a treat we spend the interest on a slap up meal out then put the rest in high interest saving account

No no no no no no no!

Leave the interest in the ISA.

The interest paid into an ISA accumulates tax free. This is the clever bit, that over time, makes you really rich! You get interest, on the interest, year on year!

If your ISA automatically pays the interest into another account, I'm willing to bet you have a Halifax ISA. (Cos they did the same to me). Ring them up and demand the interest stays in the ISA itself!

webitha

ooohhhh are you physcic afro i didnt no that i could do that and wots wrong in treating ourselves once a year it is the only meal out we get

jamesd

webitha, from 31 May 2007 the Consumer Credit (Early Settlement) Regulations 2004 apply to older loans. There are three effective dates:

• For new loans taken out from 31 May 2005 they apply already.
• For existing loans taken out before 1 June 2005 they do not apply until:
  • 31st May 2007, if the agreement is for a term of 10 years or less
  • 31st May 2010, if the agreement is for a term of more than 10 years

Anyone with a loan for 10 years or less taken out before 31 May 2005 could ask for a settlement figure effective on 1 June 2007, specifying that you want that date so that the Consumer Credit (Early Settlement) Regulations 2004 will apply to the early repayment. Then you can work out whether it's better to pay then or wait for the end.

Since the maximum penalty then is limited to two months interest that should save you some money. Not a lot when June is so close to the end, but some beats none.

afro_2

webitha wrote:

ooohhhh are you physcic afro i didnt no that i could do that and wots wrong in treating ourselves once a year it is the only meal out we get

In that case, ignore what I said! Keep going out for your annual treat!