Get a loan or use Money in Isa

phill79

Hi,
Just after some thoughts on this:

I need new Windows for the house which will cost many thousands of pounds. Do I get a loan to pay for them or use money that has been saved in an isa?

My thoughts are get a loan because although you are paying interest on it, it will only be for say 5 years whereas you keep making interest on the isa for many years more. If that makes sense.

What would you do?

gb12345

phill79 wrote: »

Hi,
Just after some thoughts on this:

I need new Windows for the house which will cost many thousands of pounds. Do I get a loan to pay for them or use money that has been saved in an isa?

My thoughts are get a loan because although you are paying interest on it, it will only be for say 5 years whereas you keep making interest on the isa for many years more. If that makes sense.

What would you do?

The ISA will be earning you a lot less interest than you will be paying out for the loan.

Why not fund it from the ISA and then put the money that it would have cost you for the loan repayment each month back into savings - at the end of 5 years you'll have a lot more in savings than you took out for the windows.

CLAPTON

phill79 wrote: »

Hi,
Just after some thoughts on this:

I need new Windows for the house which will cost many thousands of pounds. Do I get a loan to pay for them or use money that has been saved in an isa?

My thoughts are get a loan because although you are paying interest on it, it will only be for say 5 years whereas you keep making interest on the isa for many years more. If that makes sense.

What would you do?

no, it makes no sense unless the loan is interest free or at least cheaper than the ISA interest.

obviously if you use the ISA you will immediately start to save again with the money you would have been repaying the loan with.
so at the end of 5 years you will have more than before as you aren't paying any loan interest and you are gaining interest on your (increasing) savings.

telboyo

Also if your circumstances change drastically in the next five years and the SHTF you won't be stuck with loan payments you cannot afford.

phill79

Thanks for the advice.
It now makes sense.

bigadaj

If you're getting windows then get at least three quotes and small local firms will probably be cheaper and better than the big national firms. Don't fall for the special glass, deals etc spiel from the salesman, they are all pretty standard.