Toisa(?) Use to pay chunk off mortgage??

GreenNinja

I need some advice please!

Have a mortgage of 30K and recently cashed in an Axa sunlife policy (as recommended by this site) and paid 3K off the mortgage.

I have a Toisa?? whatever this is which was a Tessa I believe, does this make sense? and is now just sat doing nothing. No idea what interest it attracts, sorry! Its with the woolwich (or Barclays as it now is). Was wondering whether I ought to use this money, think theres around 3K to pay off another chunk of the mortgage????

All advice gratefully received!

:j

Jonbvn

You really need to find out the rate being paid on the TOISA before anyone can offer you proper advice. Additionally, please advise your mortgage rate.

GreenNinja

Hi, OK thanks will try to find out tonight and post up tomorrow.

GreenNinja

OK have checked everything out...

Mortgage is with Abbey and is interest only, taken out October 2006 for 12 years term. On their letter with the offer it says interest rate of 4.94% but of course its gone up a few times since then and have forgotten some of my paperwork (am at work) so sorry not sure what the current rate would be now?

With regards to the Toisa, with Barclays this is now called Tessa only ISA and the interest rate is 4.75%. I also had another account which they have converted to Mini Cash ISA, I only have £4.75 in this and the interest rate is 4.75%

I was under the impression you could only have one ISA?? Am I being thick here? please help I am confused.....

setmefree2

Hi

Do you have rainy day savings? You should have some savings. You may need a better savings vehicle - cash Isa?

GreenNinja

Hi setmefree2, yes I have £500 in a bog standard savings account for emergencies.

Jonbvn

GreenNinja wrote: »

Mortgage is with Abbey and is interest only, taken out October 2006 for 12 years term. On their letter with the offer it says interest rate of 4.94% but of course its gone up a few times since then and have forgotten some of my paperwork (am at work) so sorry not sure what the current rate would be now?

With regards to the Toisa, with Barclays this is now called Tessa only ISA and the interest rate is 4.75%. I also had another account which they have converted to Mini Cash ISA, I only have £4.75 in this and the interest rate is 4.75%

I was under the impression you could only have one ISA?? Am I being thick here? please help I am confused.....

Hi,

Based on the interest rates you have quoted, I would say that it would be best to pay of your mortgage with the TOISA.

You can have a new (different) ISA every tax-year.

GreenNinja

Thanks jonbvn for your reply. OK so am I right in thinking that at the end of the year your isa just reverts to normal interest and you only get the tax free on the one you start the following year?? or not??

Jonbvn

GreenNinja wrote: »

Thanks jonbvn for your reply. OK so am I right in thinking that at the end of the year your isa just reverts to normal interest and you only get the tax free on the one you start the following year?? or not??

Not!!!

You can pay 3k into a cash mini ISA each tax year (3.6k next year). The money inside the ISA and the accumulated interest remains completely free of tax until such time you decide to cash it in. Basically, what you do with this years ISA allowance has no bearing on previous years ISAs.

You will appreciate that over several years, you can build-up a very tidy tax-free lump sum.

More explanation of ISA's here.