Cashing in a PEP / ISA?

Leeds_Fella

Chaps,
I have had a L&G ISA for my house as part of paying the house off since 1997. It is not performing well at all and I would have been better sticking the money in a cash ISA.

The statement says it has ~ 10K. Questions:
- Is this the surrender value , if not what should I expect
- Guidance if I should think about cashing it in?

- Do these plans pick up considerably in the last 15 years?

dunstonh

PEP/ISAs have a daily value. You wouldnt normally expect a surrender penalty.

- Guidance if I should think about cashing it in?

You have £10k take free. No reason to cash it in.

- Do these plans pick up considerably in the last 15 years?

PEPs and ISAs are just tax wrappers that contain investments of your choice. They dont make or lose money. Its the investments you place in them that give the returns. Pick a poor spread of investments and it will perform poorly. Pick a good spread and they will do well.

Use of PEP/ISAs for mortgages is a good concept but it should only be used by those that are experienced investors or have servicing IFAs. I have an ISA mortgage and I have about dozen on my books. The worst one is 30% above target. The problem you have is that you almost certainly have just one fund and its either a bog standard FTSE tracker or balanced managed fund. Neither of which is best suited for the job.

You can transfer the PEP/ISA to a fund supermarket and get a better spread of investments (often at nil cost or close to nil) and that should offer you better potential.

All that said, there are never any guarantees but if you have the right tools you are likely to get a better job done.

molly1706

We have a L&G Isa too we are paying in £107 per month and after 8 years the value of the fund is still less than we have paid in. We are also considering whether to cut our losses and reinvest elsewhere or pay the £107 directly off the mortgage each month, or invest it in a cash Isa.

dunstonh

We have a L&G Isa too we are paying in £107 per month and after 8 years the value of the fund is still less than we have paid in.

That isnt unexpected using a bank based regular ISA.

We are also considering whether to cut our losses and reinvest elsewhere or pay the £107 directly off the mortgage each month, or invest it in a cash Isa.

Cash ISAs would be worse for the long term. That are not suited for that. Now is a great time to be paying into a regular investment ISA. You always aim to get more in when it drops. The problem is more to do with the quality of the investment. That can be resolved very easily and often free of charge.

jamesd

Transferring to a fund supermarket like Hargreaves Lansdown using an ISA transfer is one option. Or you could approach an IFA to see about the IFA managing the investments. You could do worse than send a private message to dunstonh to see if his firm is interested and find out what the costs for a fully managed mortgage ISA with them are.

Provided you're paying in the full difference between interest only and repayment payments each month there's every chance that you'll end up with 30-50% more than the property value and minimal no chance that you'll end up with less than you need. But this does assume decent investments and those aren't what you have now.

molly1706

Thanks for your advice, how do I transfer the isa to a fund supermarket? Will I lose the life assurance I have with the L and G?

jamesd

Phone Hargreaves Lansdown and ask them - they will be familiar with any issues that they have with transfers from L&G. You'll fill out a transfer form provided by HL.

If you want an IFA to manage the investments for you, rather than you doing it yourself with HL, you should seek an IFA other than HL first, since that IFA would have a preferred and cheapest for them to use ISA manager. It's one of the services offered by IFAs like dunstonh.

Is the life insurance connected to the ISA in some way? Usually wouldn't be.