Repayment Options
ISA mortgages
| Organising your ISA
| Advantages | Disadvantages
Advantages Of ISA Mortgages
Aside from the general points that relate to most interest-only
products, there are a few added features of ISA mortgages
which may influence your decision on whether to use one
as a repayment vehicle for your mortgage.
At the same level of contributions, an ISA should provide
a higher return than an endowment because of the tax advantages.
This happens for two reasons - firstly because none of the
monthly payment is going towards a life insurance policy
and secondly because any gains that the ISA fund makes are
added back to the fund free of tax.
Less of your monthly payments are being eaten up with set
up or maintenance charges and commission payments than with
endowments or pensions. The exit penalties if you wish to
switch to another method of repaying your mortgage may therefore
not be as harsh. Don't take that for granted though, always
check the details of your policy documents before you rush
in and do anything.
With an ISA, you get to choose an investment format that
suits your attitude to risk. If you are conservative and
have a sufficiently small loan, you could keep all your
money in cash,. Although this often a less efficient long-term
way of paying back your loan than a stocks and shares ISA,
it does carry far less risk.
ISAs are more flexible than endowment policies:
