What to do with low rate ISA? New ISA or overpay mortage?

cazs

My ISA has dipped to a rubbish rate so need to decide what to do with the money in it.

My mortgage rate is 2.39% so I'm thinking of using the cash in the ISA or most of it to help overpay the mortage. I already overpay a bit via direct debit but good to overpay more of course. No overpayment charges.

As per my understanding you're supposed to see which is higher, the savings/ISA rate or interest on the mortgage.

As far as I can see, the best ISA rate around is 2.6% though you have to lock for 5 years which I'm a tad reluctant to do just in case. Even if I did it's 0.21% higher than overpaying the mortgage which isn't to be sniffed at I suppose but on the other hand, as I'm on a lifetime tracker my mortgage interest rates might jump if the BoE base rate changes and then it would annoying if I'd locked the cash away for several years, because then the profit I'd be making on the ISA would be overshadowed by higher mortgage payments.

Just wanted to see what others would do as I am leaning towards overpayment but know that ISAs are always seen as sacrosanct so just wondering if I'm overlooking any factors or other ways to use the cash wisely. No other loans except student loan0

thanks.

Eco_Miser

You can get 5% in current accounts on a limited amount. 5% beats 2.39%.

Cash ISAs now are pointless for almost everyone.