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Deft

Stay invested or pay off mortgage

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In around 18 months time I'll come off a 5 yr fixed rate mortgage. If I'm lucky (and the pound devalues to nothing), I might be in a position to clear the mortgage. Half would be from shares ISA and half from non-ISA. Psychologically clearing the mortgage would be great, but keeping my years of built up ISA allowance could be more financially sensible. Keeping the ISA intact would probably mean another 3-5 years of mortgage. Whilst money is cheap it sort of makes sense to effectively borrow against my house to stay in stocks and shares - though it sounds a bit odd when I phrase it like that.

Any other pros / cons or general thoughts? Obviously BTL should be my real plan for the money.

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5 hours ago, willie said:

I would never give up my ISA allowance.  Look around for another fixed rate deal for 5- 10 years and keep your iSA.

I'm with you willie.  I try and maximise my S&S ISA contributions every year and intend to never remove the capital.  Every year is a one in a lifetime opportunity as far as I'm concerned.  Keep that up for enough years, add a splash of SIPP and the combined dividends will go a long way towards a tax free private pension. 

I've only been at ISA's since 2008 and the dividends spinning off of my SIPP, ISA and taxable look like this:

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Source

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Personally I would clear the debt - its the less risky option: your stock market gains could evaporate if the market crashes, but once the debt is paid then its gone for good.

Also worth noting that the ISA allowance will be 20k for the next tax year, which will allow you to rebuild the ISA more quickly.

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14 hours ago, voldemort said:

Personally I would clear the debt - its the less risky option: your stock market gains could evaporate if the market crashes, but once the debt is paid then its gone for good.

Also worth noting that the ISA allowance will be 20k for the next tax year, which will allow you to rebuild the ISA more quickly.

Same position with my mortgage rate so low that my cash ISA, 123 account, Club Lloyds and premium bonds match it. So I keep the debt but I guess the difference is mine 'investment' are savings and safe. So if rates rocket or plummet both sides of the equation match. And if they dont match I can repay debts in a week. Little scope for me to win....rather a nice feeling I earn 0.2% more than I pay. 

However in your position a crisis may result in poor investment returns and a rise in rates....double whammy. But it sounds like you have an eye on that and if you can get out of the investments quickly.....then it's a 50/50 call depending on your confidence in earning more than you pay. 

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Yeah at the moment it's a bit swings and roundabouts. If I destroy the ISA, I can build it up again in a few years - or hold mortgage and pay it off naturally in a similar time frame. A nice enough problem to have.

I suppose I have angled more towards paying down the debt, as I haven't maxed out ISA allowance - but overpaid on the mortgage first and then anything spare into ISA (the non ISA stuff is company share scheme / options). If I was really bullish I would have gone ISA 100% (plus wife's allowance) and with hindsight that strategy would have paid off handsomely.

Now the sums are less likely to ruin me I'm feeling a bit more comfortable holding some cheap debt and keeping the investments in place - but I do enjoy the idea of not owing the bank anything.

I think my brain has been so focused on paying off the mortgage I'm not sure what my post mortgage life strategy is! Getting ready for midlife crisis.....

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1 hour ago, Deft said:

Yeah at the moment it's a bit swings and roundabouts. If I destroy the ISA, I can build it up again in a few years - or hold mortgage and pay it off naturally in a similar time frame. A nice enough problem to have.

I suppose I have angled more towards paying down the debt, as I haven't maxed out ISA allowance - but overpaid on the mortgage first and then anything spare into ISA (the non ISA stuff is company share scheme / options). If I was really bullish I would have gone ISA 100% (plus wife's allowance) and with hindsight that strategy would have paid off handsomely.

Now the sums are less likely to ruin me I'm feeling a bit more comfortable holding some cheap debt and keeping the investments in place - but I do enjoy the idea of not owing the bank anything.

I think my brain has been so focused on paying off the mortgage I'm not sure what my post mortgage life strategy is! Getting ready for midlife crisis.....

Get a mountain bike. Usually start at £350 and then in 3 years time find yourself in Lycra on a £8000 bike doing 300 miles a week. 

Me, I get the popcorn and watch you go by. ?

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I've chosen to destroy my cash ISAs in the past to be mortgage free (on the grounds that the allowance seems to be getting more generous, easier to replenish and now attract truly awful returns).  S&S ISA? I think it's a more difficult call. 

I can tell you that being mortgage-free feels great though - and is a massive step towards being financially independent and/or to retire early. 

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22 hours ago, Phil321 said:

Get a mountain bike. Usually start at £350 and then in 3 years time find yourself in Lycra on a £8000 bike doing 300 miles a week. 

Me, I get the popcorn and watch you go by. ?

If this happens the circle is complete and I have become my dad.

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