Overpay mortgage or invest in ISA to overpay mortgage?


I have a question, my mortgage repayments are around £560 per month, I overpay to £800 in total and I am able to overpay more. Am I better off maxing out an ISA over the tax year and putting that into my mortgage in 1 lump sum, or am I better off putting it all into a mortgage in monthly overpayments? I turned Radio 5 on a while ago and Martin was talking to someone about how they were better off the ISA route, but he said it was for that specific guys circumstances, and he was retired I believe. I didn't hear the whole call. Anyway, my mortgage is fixed at 3.19%. I'm not sure what an ISA saves roughly? 1%?

Any help and advice would be greatly appreciated.



  • edited 23 November 2014 at 10:44AM
    newgirlynewgirly Forumite
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    edited 23 November 2014 at 10:44AM
    Hi, it really depends on he rates of your mortgage /isa. in many cases though overpaying is more cost effective, but it's probably best to have a savings buffer before starting to overpay. Just re read your post , sorry I see the question you are asking is about paying it off in a lump sum, it would be best to check if interest on the mortgage is worked out daily or annually (most are daily now) if annually save in an account and pay off just before your annual interest is charged, if daily it is better to pay as you can.

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