mortgage equity - pay back or can i get better returns

rockrat

hi all , not too sure if i should put this here or in the mortgage section.
anyway. to my dilemma. A year ago i drew some cash from the equity i had in the house from our mortgage to help a family member, who has now paid me back, We are only talking £18k. the family member has been paying the extra mortgage amounts the last year, but i can more than afford the extra monthly amount if i know i have put that cash elsewhere and its earning MORE than the amount it is costing me on the mortgage.
to the finer details. my mortgage is with saffron walden BS, @ 0.20% above base rate for the life of the mortgage (i.e 4.95% currently) and this is the perfect mortage for me as it has NO penalties at any time and the discount is for the life of the mortgage, 25 years.
i have already filled my wifes and i's ISA allowance and so thats gone.
i am a 40% taxpayer, the wife does not earn.

i have two children, 5 and three. i read with interest the halifax 10% child saver, but will they get that amount for the full tax allowance (£4,500)? I would still then have £9,000 remaining to reinvest as well and need get returns above the 4.95%.

Is any of this possible without having to lock the cash away long term, and without having to have stock market risk levels?

i appreciate any advice

gravitytolls

Only 18k...........?

grumbler

Paying 40% tax you have no chance to beat you mortgage rate: you need 8.25% on savings to do this. How much tax does your wife pay? If 20% then you nead 4.95/0.8=6.19% on savings. You can get this only with regular savings: Halifax 7% (£250 p.m.), HSBC 8% (£250 p.m., but must pay salary into current accoun with them)

I think your best choice is to repay mortgage after filling your ISA allowances.