ISA - use as house deposit or leave be ?

swayzak

If I need to buy a new house - am I better to use all my cash ISA towards deposit, or leave it be ?

I'm a higher tax payer...

thanks

homer_j_3

Can you afford to buy the house without touching the isa?

If you can where is the deposit coming from?

swayzak

homer_j wrote: »

Can you afford to buy the house without touching the isa?

If you can where is the deposit coming from?

Yes I can - deposit will be from bog standard savings plus release of equity from current mortage (splitting from partner).

The general impression I get from perusing these forums is to leave the ISA alone, unless you really have to use it. Is this correct ?

If so, I'm just trying to get my head around the math e.g. why is it better to leave rather than avoid paying extra interest on mortage ?

homer_j_3

You are a higher rate tax payer, an offset with your savings may be better than an ISA if the ISA rate is lower than mortgage rate.

You have to make sure your savings are attracting a higher rate of interest than your mortgage. If they are not then you need to look to incorporate these into the mortgage somehow. If you need access then offset or flexible may be the option.

I would seek professional advice if you are unsure.

Dan_Collins_2

Yeah, talk to an accountant, Homer_j is right. Then again it depends on the figures. He may say its nothing to worry about as the saving or tax saving is minimal, however if you dont ask you dont get!

swayzak

thanks

So do I speak to mortgage advisor, "independant financial advisor" or accountant ?

If accountant, what are these sort usually called (those who help with domestic financial advice) ?

I've never used independant advice before.....

Jonbvn

Depends on the difference in rates between the mortgage and the ISA.

If ISA IR > MTG IR Keep ISA
If MTG IR > ISA IR Pay deposit.

As homer says, an offset mortgage is a flexible way to proceed. However, you need to do the numbers, since in most cases the rates on offset mtgs are somewaht higher than most other types.