Opinions on best way to finance house purchase

woodpecker

I am purchasing a house and wanted to get opinions on the best way to pay for it. The purchase price is £287500 and I will have:

• £200k from sale of current property
• £40k mortgage
• £50k from ISA

When I factor in other costs (legal, stamp duty and moving etc.) I will need more than the £290k listed above.

Is it better to take more from my ISA (which I can do) or a lump sum from my pension (also possible as I'm 55). I appreciate there are other variables I've not listed above, which might be relevant, so please let me know if I can give more information which would help.

I guess there is probably more than one answer, but I'm just curious what people think.

Thanks in advance

Keep_pedalling

if you can borrow money at a lower rate than you get on your savings then keep the ISA and borrow more.

Woodstok2000

What's your mortgage rate, and what's your ISA rate, how much extra cash do you need?

Yorkie1

Using the pension would be ill-advised, unless the funds in it are so significant that taking a lump sum from it would not make much difference to your ability to live comfortably for decades in retirement,

sheramber

Do you have more than £50k in your ISA, as you have included that in the £290k that you say will not be enough?

woodpecker

https://forums.moneysavingexpert.com/discussion/comment/82138984#Comment_82138984

The mortgage is fixed rate for 5 years at 4.91% and I will pay off the whole amount in 5 years. It's a Stocks & Shares ISA so not a fixed rate of interest. I could probably do with another £5k for expenses associated with the purchase.

woodpecker

Yes I have about £76k in the ISA. Once the purchase goes through I intend to keep paying into the ISA to build it back up. I also want to pay the mortgage off asap so I don't carry it into retirement.

woodpecker

Sorry that was supposed to be a response to sheramber!

Woodstok2000

For an extra £5k and a fixed rate mortgage I'd be tempted to increase the mortgage borrowing and leave the ISA alone, but that's just me - there's not really a right answer here as it depends on your risk appetite.

Albermarle

A lump sum from a pension would presumably be all or part of the tax free 25%? If it also included some taxable income, it would compromise your ability to add to the pension in future, due to the MPAA.

As said if your pension is pretty large, it could be a source of funds, but remember the pension may have to last you 40 years so a degree of caution is needed in withdrawing funds now.