Would you use your ISA savings to clear the mortgage?

[Dinosaursloveunderpants1]

Just curious to know other people's opinions. I have enough money in my S&S ISA to clear my mortgage.

I currently pay £1000pm, this is comfortable. My ISA isn't yielding great due to the current economy. I probably couldn't encash just yet but would you repay just to be debt free or have money invested instead?

I would commit to saving £500pm into my ISA to restart a new pot.

Just wondering what you'd do.

we’re not, unless mortgage interest rates hit 8%. Up until that point makes no financial sense

I've been thinking about it but currently not doing so, mainly because of the changes coming in to isas next year (I.e. if I took £20k out of a cash isa now I won't be able to put all that back in next year) and because I'm thinking of moving house so want to have the money free.

Also my isa is at 4.2% and mortgage 4.6% so there's,s really not much in it. If it was 3% vs 5% I'd reconsider.

I am putting most other savings once Ive maxed out the ISA towards the mortgage though.

I used savings/investments to pay off mortgage, best thing i ever did, equities can be good over the longer term but thats all historical, no guarantee this will always be the case.

The OP is paying £1k per month Mortgage, straight away she has £1000 a month to play with, save, spend, extra pension...

Caveat is her job security and employability.

well unless she is still in the green and is expecting further dips before going back in.

I moved £30k out a month ago when I was still 10% up (although had been 13% up at one point), crystallised that gain, let it sit in my cash isa earning 4% and went back in with £20k yesterday when it had dropped to less than 1% up. Hopefully things will now pick up a bit. If so I will put the rest back. I have a flexible isa though and can move back and forth from my cash isa

I wouldn’t. Because one day you’ll clear the mortgage and you won’t be able to save tax free (only £20k a year). We paid off the mortgage and now I regret not paying it off slower and having more in ISAs

It depends on the interest you’re getting from your savings and the interest rate on your mortgage . If it is measly 2% on savings, but mortgage is 5%, I would absolutely pay off the mortgage and then start saving £1k a month again.

The 2% quoted can not be compared against the mortgage because one is a fixed rate (mortgage) and the other is a growth figure for an interdeterminate time period in the stock market.

OP needs to review her investments when the fixed mortgage rate comes to an end which I think is what she said she will do. Then decide if she is happy restricting future potential investment growth (which, with the power of compounding, can be significant) to pay off her mortgage.

Sorry so I only recently changed my investments within my ISA so 2% is very short term. I know it will go up in the future.

I did this 5 years ago. I wanted the mortgage gone and I've saved up plenty since then but obviously lost out of the tax free status, which I may one day regret now its been limited from 2027.

I am keeping mine in a stocks and shares ISA. The tax relief is really valuable and will mean that in retirement I will be less likely to be paying higher rate tax. Also long term returns on stocks and shares will pretty much always beat mortgage rates. Also if I used them to pay off my mortgage I would be less disciplined and more inclined just to spend the x saved each month.

Only for cash ones, a cash ISA wont outperform mortgage rates.

For me, paying of the mortgage was the best thing i ever did, sure i lost savings but not having that sort of debt is very liberating...

Cash ISA with an interest rate below the mortage - yes.

Stock and Share ISA - no, not at the moment. A down market is not the right time unless you desperate need the money.

I would sit on it and re-evalue when your fix term is up. Maybe use some for an overpayment. Or reduce the monthly payments to the ISA for a a higher monthly repayment of the mortgage.

But it also depends why you set up an ISA. Our Stock & Share ones are earmarked for retirement and DD's uni costs. So long-term investments. I have cash ones for short-term plans like house emergencies or updates.

I would find out the penalty for early redemption on your mortgage and if it's not too hefty, pay it off in full. If the redemption penalty is significant, then is there an amount you're allowed to pay off annually without penalty? If so, pay that from your savings each year until renewal and leave your current mortgage payment as is, so you are paying off more of the capital. If you cannot pay off anything without incurring significant costs, just plan to pay off the mortgage in full in 2029 when the fixed rate (or overhang period?) ends. It's a waste of money to pay so much interest and you will be able to rebuild your savings quickly without those mortgage payments to make.

I wouldn't. Firstly, you don't sell during a downturn. Secondly, you'll lose all that tax free savings potential. Can you overpay your mortgage instead?

Yes can you over pay mortgage instead? Check, but usually you can overpay by x amount with no penalty.

That way you only reduce the savings slightly each month, but still will pay mortgage off quicker.

The OP isn't selling now as mortgage term is fixed atm.

Since the ceasefire, my tracker SS has bounced right back.... but i expect a rocky ride so long as the Orange Toddler is at the helm....

For me it would depend how many years ISA savings you'd be wiping out to clear your mortgage. I love being mortgage free.

If you are currently paying £1k a month comfortably on your mortgage then you could pay off your mortgage and be saving that £1k a month back into an ISA. How many years would it take to build your ISA savings back up?