Overpay mortgage or save into cash ISA's???

Mr._H_2

Sab, here is what you should do:

1.) Max out both your ISAs for this tax year if you haven't already done that.

2.) If there's money going spare once you've done that, open an ICEsave savings account in your wife's name and save into that (even after tax, the interest rate is greater than that of your mortgage) until your mortgage deal expires.

3.) When your current mortgage deal expires, go to a whole-of-market mortgage broker, money supermarket and the like, and post here to find the best mortgage rate for you.

4.) If you saved anything in step 2.), you can use that to pay any fees that will probably apply on your new mortgage. Do not use any ISA money for this.

5.) If there's any money left after that in the ICEsave pot, use it towards maxing out the 2008 - 2009 ISAs.

6.) Once you've remortgaged it's unlikely that savings after tax will be greater than the mortgage rate. So once you've maxed out your ISAs, you should use any excess money you may have to overpay the mortgage.

You should not use any ISA money to pay off the mortgage, because you earn more interest on the ISA than you would save on the mortgage (this will still be true after you re-mortgage, it's just that the difference in rates will be smaller). Also, once you've taken money out of an ISA, you can't put it back.

sab77

Understood....and thank you