Mortgage partial payoff OR keep saving into an ISA

ubdai66

I was quite lucky and got into the housing market with a very small mortgage, before house prices went crazy.
I now have in an ISA approx 80% value of what I need to pay back to the bank for the house purchase price. My mortgage was an interest only with a stocks/shares ISA setup to pay back the lump sum.

So, should I enquire to see if I can make a large deposit partial payoff using the ISA funds and keep paying into a small amount mortgage (less than 20K) or should I just keep saving into the ISA in the hope that at the end of my term it full covers the original sum.

I am only asking as when Liz Truss did her mini budget, it effectivley wiped out a years growth vlaue on the ISA and took another year to earn it back. And rumours have been heard that with DT coming back the financial market could take a hit.

Thank

tetrarch

I'm going to guess that your ISA is some kind of bond ISA - hence the precipitous drop after the Liz-aster

From a mathematical point of view your ISA return rate must be greater than your mortgage rate for your strategy to work and you've already discovered that there is an element of risk to that strategy

It does depend on your long-term plans and whether you would ever need that money for anything else. Selling your ISA and paying down means that you will lose the tax wrapper which can be valuable. It may be in the future that you may inherit some money, or downsize or take a tax-free lump sum from your pension and that tax-free wrapper would be very useful to protect your cash from the taxman

I would consider re-mortgaging to an offset mortgage. I know Barclays offer offset mortgages that allow cash ISA's as an offset. You would be beholden to Barclay's rate and you would likely pay a fee but you would retain the tax wrapper.

If you do go down this route THERE IS ABSOLUTELY NO NEED TO TELL A MORTGAGE BROKER OR BARCLAYS WHAT YOUR PLANS ARE.

I took out an offset mortgage one year before I took (planned) early retirement to my 67th birthday just in order to keep the ISA tax wrapper. This flexibility can be massively valuable 

Regards

Tet

Hoenir

We know nothing about your mortgage product nor what you are invested in. As you alluded too. The value of investments can fall as well as rise. If "growth" were guaranteed. Be a no brainer to choose investments over debt. As was found some decades ago. Bubbles eventually burst . There's no such thing as free money.