Should I overpay my mortgage or save in an Isa?

Q Would it be better to invest £5,000 in a cash Isa paying 3.3%, or pay off £5,000 of my £185,000 mortgage which has a fixed rate of 2.99% for one more year? GC

A It depends on what sort of mortgage you’ve got. If you have an interest-only deal, paying off £5,000 would save you £144 in interest over a year, which is less than the interest of £165 you would earn if you put £5,000 into your cash Isa.

However, if you have a repayment mortgage, paying off £5,000 would mean your monthly mortgage repayment would go down from £877 to £853 (assuming a 25-year term). So over a year you would save £288, which makes paying £5,000 off a repayment mortgage a better deal than investing in an Isa.

Virginia Wallis © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

Need a Loan? Visit Secured Loans Broker.

View full post on Free Secured Loans Advice

This entry was posted in Bad Credit Loan UK and tagged , , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>