Use ISA towards Mortgage

dazjw

Hope I have asked this in the right place.  I am thinking about cashing in my ISA and putting it towards the mortgage.  Currently overpaying but have worked out that with the ISA money and increasing the overpayments (can do this without breaking the bank) I could have it paid off within just over 2 years (currently 11 years left).  Mortgage interest rate currently 2.1% with ISA rate at 0.01%.  I know using tax free savings doesn't seem wise (we do have other contingency) and rates could change etc. but the thought have having the mortgage gone in a couple of years is appealing.
Cheers

grumiofoundation

The fact it is tax-free is meaningless considering how low an interest rate you are getting, why do you want to keep the tax free status? (Planning to invest it at some point and want to keep in tax wrapper?). 

You can get ~1% interest, if that would impact your decision? 

What is your pension/retirement situation? 

Investing the money, whether in stocks and shares ISA or pension/lifetime ISA (lagged options more tax efficient but less accessible) would be likely to return more than 2% over the next ten years - but obviously this return is not guaranteed. 

If the alternative is money sitting in a low interest account (ie you don’t want to invest it), and you have enough accessible cash and don’t feel you need/want access to this then overpaying the mortgage probably makes sense. 

Will you hit any ERC issues? 

dazjw

grumiofoundation said:

The fact it is tax-free is meaningless considering how low an interest rate you are getting, why do you want to keep the tax free status? (Planning to invest it at some point and want to keep in tax wrapper?). 

You can get ~1% interest, if that would impact your decision? 

What is your pension/retirement situation? 

Investing the money, whether in stocks and shares ISA or pension/lifetime ISA (lagged options more tax efficient but less accessible) would be likely to return more than 2% over the next ten years - but obviously this return is not guaranteed. 

If the alternative is money sitting in a low interest account (ie you don’t want to invest it), and you have enough accessible cash and don’t feel you need/want access to this then overpaying the mortgage probably makes sense. 

Will you hit any ERC issues? 

Thanks for this.  I'm 20 odd years off of retirement yet.  I feel like I have about eight pensions, but in reality it is probably only three and only paying into one.
The only ERC is a £65 fee.  I suppose we are fortunate in a way in that we can overpay as much as we like with no % charge for early repayment.
I suppose there are other long term things I could do with the money but in my simple mind   disposing of the mortgage debt would seem a relief.
Cheers