Advice: overpay mortgage from cash ISA reserves?

getmore4less

Thrugelmir wrote: »

Keep an emergency fund of say 6 months expenditure. Above this overpay the mortgage. Interest rate rises are on the horizon that's a stone wall certainty. So the more you reduce your debt the less you'll be impacted.

When mortgage rates rise savings rates will rise.


On a base+1.99% tracker there is a good chance that there will be savings rates around that rate.

getmore4less

everton85 wrote: »

Any further advice on this?

Given it's unlikely that the ISA allowance will be reduced from £15k, I am thinking I may as well withdraw half of my £20k in ISAs and pay off a lump sum of the mortgage.

My ISA is currently only paying 1.5% where as my mortgage repayment rate is 2.49%.

How much total surplus do you have a year(savings, overpayments).


£60k over 23years is £286pm


if you pay £10k off that reduces the payment to £240.


Another thing to look at is churning money through regular savers and current accounts that pay more than 2.5% net.




what's the salary situation going to be like if you can see significant increases so you will be able to save significantly more than 15k a year then keeping the ISA might be worth keeping.


paying off £20k and making the payment say £460pm mortgage gone in 8 years, rebuild savings with rest of surplus.


( still leaves £10k bond as a back up )

everton85

getmore4less wrote: »

How much total surplus do you have a year(savings, overpayments).

£60k over 23years is £286pm

if you pay £10k off that reduces the payment to £240.

Another thing to look at is churning money through regular savers and current accounts that pay more than 2.5% net.

what's the salary situation going to be like if you can see significant increases so you will be able to save significantly more than 15k a year then keeping the ISA might be worth keeping.

paying off £20k and making the payment say £460pm mortgage gone in 8 years, rebuild savings with rest of surplus.

( still leaves £10k bond as a back up )

This is a helpful way of looking at it. Thanks!

My salary in the current job could potentially rise by £2k per annum in the near future, but it's not going to rise beyond £28k unless I change jobs. So I think the income is fairly set.

I like the idea of paying off a significant lump sum and still making regular overpayments to reduce the period over which I pay back the mortgage to 8 years or less as you suggest. I should still be able to make some savings during that time, and I'll keep the £10k in the bond.

getmore4less

One other thing.

Any plans to move?

being able to port a base+2% tracker may make building up a cash reserve a better option in case you can't get the rate again.

everton85

getmore4less wrote: »

One other thing.

Any plans to move?

being able to port a base+2% tracker may make building up a cash reserve a better option in case you can't get the rate again.

No immediate plans, that would be at least 2-3 years away by which point I presume the mortgage market will be completely different as the rates will all have gone up. ?

getmore4less

experts that sell mortgages have been saying that for years to create business.

i would say 2-3 years is very soon to move given moving costs swamp the difference in rate costs.