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should ISAs be emptied to pay a deposit
justme111
Posts: 3,531 Forumite
I am sure many money savy people have worked it out already so could you please share your knowledge. Which way would be most profitable ( or least expensive), to live money on ISA or to scrap it to put as big deposit as possible so there is less mortgage interest ?
The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers usually to difficult choice between two undesirable options.
Often people seem to use this word mistakenly where "quandary" would fit better.
Often people seem to use this word mistakenly where "quandary" would fit better.
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Comments
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If your APR on the mortgage is higher than your ISA interest rate, then it makes short term sense to make an overpayment if you are allowed to do so by your provider without an early repayment charge.
The reason I highlighted "short term" there is because you lose the long term tax-free benefits that you get from the cash ISA, including the sheltering of some of your assets from assessment for certain state benefits.
As such, the decision will boil down to a personal one of whether you'd prefer to keep your ISA money for the long term or pay off part of a debt.
I'm not actually sure what I'd do in your case, but I have so little in my ISAs that it would make only a tiny difference to the monthly repayments of my mortgage!I am a Chartered Financial Planner
Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.0 -
As Aegis says, it depends on what's going to happen in the future so you'll have to make your own guess. No definite answer.0
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