Encashing ISAs vs bigger mortgage

isofa

Just want some opinions: we are in our 30s and have built up a nest egg for the future in cash ISAs, and are planning to move soon to a bigger house. We also have some cash on instant access.

Despite the dire rates on offer at the moment, is it generally considered prudent to hold onto ISAs due to tax status and borrow more on a mortgage? (As hopefully in the future when rates rise, hopefully the ISAs will accrue better interest.)

We will use the majority of our instant access cash for the move as obviously to us that's the best option, and then need only a small ish 25% mortgage on the new house, whereas if we use all the ISAs it'll be smaller still...

We don't have pensions of any great worth, one of us works for ourselves and the other is a stay-at-home parent. We are savers rather than spenders (we've been saving hard for this move for many years).

(There is another option which would be to heavily re-mortgage our current property (which has doubled in value in ten years) using it as a buy-to-let, and have bigger main mortgage on the new house - but I think the level of debt may put us off - and a lender may not like the debt level.)

Linton

Surely, barring special deals and fixed rate agreements that work out very well, the mortgage interest rate will always be higher than the interest paid on a deposit account. That's how banks make their money. So you should use money from the cash ISA.

BUT.....

If you were talking about a Stocks & Shares ISA then things would be different. Returns on those should in the long term exceed the interest on a mortgage.

The standard advice is to have 6 months living expenses in cash so dont deplete your cash pot too much.