Pay off a lump or keep in an ISA

MrMrMr

I have an ISA that I eventually got after reading on here and getting my butt into gear

So it's got a nice little pot now, I've also recently 6 months or so, been overpaying on the mortgage.

So there's 20K say in the ISA, should I make a large payment on the mortgage, think there's 30K left, and keep half in the ISA? Obviously the ISA isn't great Saving rates at moment, and keep the mortgage payments still the same?

Be great to pay off the mortgage, we may be moving in next year so we wouldn't be mortgage free but obviously reduced.

So ultimate question is, should I leave the ISA mounting up, or should I make a big payment off the mortgage, still have some savings and reduce the term?

Don't have any other debts really, or should I if could pay off all mortgage, and then start to save up again? If that's possible is that the best way? As I say it may only be until move, but if you could is it best to pay off mortgage totally, and then start to re-save up again?

Thanks

Southend1

Do you have an emergency fund of say 6 months salary in savings? If so and the mortgage interest rate is higher than your savings interest rate then it would make sense to pay a lump sum off the mortgage, unless there are any penalties for large overpayments on your mortgage.

MrMrMr

Do have a little hidden away to cover, so the 20K is available. Think the ISA rate is 1.5% and the mortgage is definitely higher than that, maybe 3.5% would have to confirm.

Also just been reading about offset mortgages (currently on repayment to), whereby I can keep the savings, offset it to mortgage and still have access to the savings if required. Only downside is do t get interest on the savings, but it's low currently anyway. Is this not a better way?

smifffy1989

MrMrMr wrote: »

Do have a little hidden away to cover, so the 20K is available. Think the ISA rate is 1.5% and the mortgage is definitely higher than that, maybe 3.5% would have to confirm.

Also just been reading about offset mortgages (currently on repayment to), whereby I can keep the savings, offset it to mortgage and still have access to the savings if required. Only downside is do t get interest on the savings, but it's low currently anyway. Is this not a better way?

Can be but that would be a remortgage and if your looking to move next year it may be better to keep your isa and use it next year to increase your deposit for your new place.

Thrugelmir

MrMrMr wrote: »

Is this not a better way?

Offset mortgages tend to have slightly higher interest rates. So if your plan is to move in the near future. Overpaying your current mortgage is the best approach.

MrMrMr

If I do move soon, and pay off now a lump, then I won't really need a offset though as my saving as such (emergency fund excepted), will be gone.

Yes I will have to look into offset and see if it's worth it as I won't remortgage yet until we move.

So the question for me still remains ahhh, pay off lump now and keep same payments going on rest if mortgage or leave where it is in an ISA.

Thrugelmir

MrMrMr wrote: »

So the question for me still remains ahhh, pay off lump now and keep same payments going on rest if mortgage or leave where it is in an ISA.

What's so difficult? Either you save yourself money or you don't.

getmore4less

smifffy1989 wrote: »

Can be but that would be a remortgage and if your looking to move next year it may be better to keep your isa and use it next year to increase your deposit for your new place.

smaller mortgage == more equity == bigger deposit.

makes no difference to the deposit if selling.

Hurdler

I have a little of both. I have a tidy cash ISA, and I used a mahusive redundancy lump sum to get my mortgage down to below 100K so now I can actually pay off enough each month to bring the monthly payment down.
I have six months emergency money as well.

There is no hard and fast rule really... I prefer to have all bases covered

MrMrMr

Thrugelmir wrote: »

What's so difficult? Either you save yourself money or you don't.

Not sure what you mean to what bit, if I sound stupid I'm sorry but that's why I asked for comments and advice and examples of what others have done.

Hurdler wrote: »

I have a little of both. I have a tidy cash ISA, and I used a mahusive redundancy lump sum to get my mortgage down to below 100K so now I can actually pay off enough each month to bring the monthly payment down.
I have six months emergency money as well.

There is no hard and fast rule really... I prefer to have all bases covered

So your in ideal situation, if I paid off the lump, I'd lose the ISA but still have the emergency 6 months, and if have to start again with savings. Isn't a problem but obviously will take me a while.

Or should I do another option, as my mortgage allows me, to increase overpayments, ie double the payment required to pay off quicker? This way I keep the 20K in an ISA and stop putting into that and putting the money into overpayment?

Thanks