Mortgage or Isa

Tony69

Our house purchase is about to go through.

Our mortgage rate is 2.95% variable (interest only),but in the mortgage illustration it says the overall comparison is 3.2%. What does this mean?

Anyway my question is, I have other monies in ISAs paying more than 2.95%. Should I leave this money in the ISAs or close them and put it towards the mortgage so reducing the monthly repayments. The way I see it I should leave it in the ISAs as I will be getting more interest but I can't help thinking I am missing something.

Tony69

Can anybody help/advise please?

Yorkie1

Personally I'd leave the money in the ISAs.

Thrugelmir

Tony69 wrote: »

Our mortgage rate is 2.95% variable (interest only),but in the mortgage illustration it says the overall comparison is 3.2%. What does this mean?

True annualised rate of interest.

dimbo61

2 questions
1 How are you going to pay back the mortgage in 25 years ?
2 Are the ISA savings your only savings ?
I would want to have a good Emergency savings pot ( just in case)
Having cash in the bank provides many people with a security blanket and having cash to buy big items ( car, furniture, TV, washing machine etc ) means you dont end up with expensive finance
You are also earning more than your mortgage rate and can use the Cash ISA,s as long term savings towards retirement
BUT question 1 is very important

Gorgeous_George

The overall cost for comparison is the cost of the product. Any fees that you paid to arrange the mortgage are included in this cost. 2.95% is the interest rate that you pay each month - it has nothing to do with inflation!

You are right, leave the ISAs in place if they earn more than 2.95%. You could do better to move the ISAs elsewhere but that is a personal choice. You could probably do better than the 3.5% that a top ISA pays.

Good luck.

GG

Thrugelmir

Gorgeous_George wrote: »

The overall cost for comparison is the cost of the product. Any fees that you paid to arrange the mortgage are included in this cost. 2.95% is the interest rate that you pay each month - it has nothing to do with inflation!

Was typo - interest.

Tony69

dimbo61 wrote: »

2 questions
1 How are you going to pay back the mortgage in 25 years ?
2 Are the ISA savings your only savings ?
I would want to have a good Emergency savings pot ( just in case)
Having cash in the bank provides many people with a security blanket and having cash to buy big items ( car, furniture, TV, washing machine etc ) means you dont end up with expensive finance
You are also earning more than your mortgage rate and can use the Cash ISA,s as long term savings towards retirement
BUT question 1 is very important

Only a 10 year mortgage. We are doing up our current property cosmetically wise and this should cover most if not all of the mortgage when sold.

ISAs not the only savings. I have other savings awaiting new ISA year and wasn't sure whether to put this money into ISAs above 2.95% or pay off some of the mortgage capital so reducing the interest monthly payments.

Tony69

Thrugelmir wrote: »

True annualised rate of interest.

So if my ISAs are for example only getting 3.1% interest, do you suggest I should put money towards mortgage as 3.2% is the true interest?

dimbo61

The interest rate you are now paying is 2.95% so if you can get more than this from cash ISA,s then keep your money in the ISA,s.
As long as you make the IO mortgage payment each month the lender will be happy.
If you can build up your savings over the next 10 years you then have the choice of selling up or repaying the IO mortgage at the end of the term