Best Buy Mortgages Glossary - ISA mortgage
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ISA mortgage
ISA's are investments in the stock market in a tax efficient
way. Using an ISA to pay off your mortgage could make a lot of
sense but you must remember that anything to do with the stock
market involves risk. So, at the very least, you should
understand the risks and the benefits of choosing saving through
an ISA to repay your home loan. In effect, you are taking out an
interest-only mortgage and saving into an ISA to build up funds
to repay the capital sum you have borrowed. The traditional
alternatives to an ISA mortgage are repayment and endowment.
When you take out a mortgage loan, you make be doing so for 20
or 25 years and at the end of that period you'll want to have
enough cash to pay off your debt. ISA's do not offer a
guaranteed return and you would probably need to arrange term
assurance (life cover) for the mortgage sum as well to satisfy
your lender. However, one of the benefits of ISA's is any
profits you make are free of capital gains (CGT) and income tax
and could work out much cheaper than an endowment mortgage. With
good investment returns you could find yourself in a position to
repay the mortgage loan sooner than expected and for a lower
outlay.
See also: Current
Mortgage Rates and Deals
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