Keep ISA or pay off mortgage

skysnapper

I currently have 20k in ISA savings...which i want to keep aside should i decide to buy a second property in future. My current mortgage stands at 63k

With my new mortgage rate going to be between 5.49 and 5.79
and the ISA at 6% is it really worth me having it in an ISA anymore.

It was before as my mortgage rate was 4.39%.

However this is set by as a deposit for maybe 3 or 4 years time although i reckon i could put away if im careful 5k a year again,

As a sidenote if i needed a larger deposit is possible to borrow against what i have already paid off?
For example currently, flats worth 155000k and have 63k left.

Cheers.

dimbo61

hi sat and looked at this for a few minutes !
you have £20k in ISA,s earning 6% at the moment ?
your new mortgage is going to cost you between 5.49% and 5.79% so i can see what you mean by "should I pay off some of the mortgage with my ISA,s"
As your deal is coming to an end now is the time to pay off a lump sum and
I would pay off say £15k and reduce the mortgage to £48k
If you can save £5k a year and afford the new mortgage payment you may
even be able to pay off the mortgage within the next 3/4 years.
Why do you want 2 mortgages at the same time ?
If you have the flat paid for then think of a second property and another
mortgage GOOD LUCK

ray123

There is an article on the website - Should I pay off my mortgage?

http://www.moneysavingexpert.com/mortgages/mortgages-vs-savings

Technically, you would be better off to keep the ISA, so long as the interest rate is higher than the mortgate interest rate. If the rate increases to 5.49 and the ISA is 6%, you would make approximately £100 per annum profit.

Nationwide is currently offering a one or two year fixed rate ISA of 6.15%, so it might be worth transferring your ISA into a two year bond!

If the interest rates are reduced below 5% by BoE, it is likely that the ISA rates will be reduced next year... The interest rates of certain accounts have already been reduced!

EdInvestor

You also need to consider the ISA tax wrapper angle: you can't replace the money already in the ISA if you take it out.The ISA and it's income will be a valuable pot of savings for you when you retire, standing as a "2nd pension".Try to avoid losing the tax free status of this money if you can - better to increase mortgage payments from income if you really want to reduce the mortgage.

Retired_Minky

I would get the offset mortgage from Barclays (Woolwich).

0.74% over base rate and also allows you to offset your ISA cash against it.

Best of both worlds. Keeps the cash in a tax free wrapper and also offsets your mortgage.