Questions of cash: The Isa mortgage; Abbey on-line; Paying for extensions


We have a 25-year, £75,000 mortgage paid for by a Pep/Isa, which, with 15 years to go, we are worried may not realise the sum borrowed. We have paid £75 to £100 monthly and returns have been weak. £5,068 was invested in the Pep and £2,796 in the Isa. The Pep has gained £1,100 and the Isa has lost £400. Should we cut our losses and take out a repayment mortgage for the remaining 15 years, or wait for an upturn in the market and stay with our Isa? MOH, Middlesex.

Q: We have a 25-year, £75,000 mortgage paid for by a Pep/Isa, which, with 15 years to go, we are worried may not realise the sum borrowed. We have paid £75 to £100 monthly and returns have been weak. £5,068 was invested in the Pep and £2,796 in the Isa. The Pep has gained £1,100 and the Isa has lost £400. Should we cut our losses and take out a repayment mortgage for the remaining 15 years, or wait for an upturn in the market and stay with our Isa? MOH, Middlesex.

A: This is a common concern. The weak performance of stocks mean that Pep/Isa savings plans may not fully repay mortgages. It is too soon to panic, but a good moment to exercise caution by putting in place a failsafe plan. Steve Herbert of Select Mortgages and Loans suggests your best option is probably to stick with the ISA as a savings plan, but without assuming it will pay off your mortgage. You could take out a repayment mortgage for part of the balance and maintain your ISA. Most people in this situation are choosing to hold on to their existing savings plans in the hope of improved performance, without putting anything more into them.

Q: On 3 November you listed the web-based Abbey National e-Saver as one of the best no-notice postal accounts. The application form warns that an Apple Mac computer does not support their system. What should I do? NB, Sevenoaks.

A: Abbey National tells us there has been a misunderstanding. Apple Mac users have normal access to the site like any PC user, including the e-banking element. There are 'glitches' affecting Apple Mac customers, but Abbey National says these are easy to solve. Advice is contained on the web site and there is a back-up helpline (0845 600 4388).

Q: We are planning to extend our house to accommodate our expanding family, at a cost of £60,000. This is also the market value of a flat we own and rent out, receiving £350 rent a month. What is the best way to finance the extension? The flat is not likely to increase in value greatly over the next five years and will require expensive maintenance. What are the implications of capital gains tax? The flat is in my wife's name and our home is in both our names. JF, St Albans.

A: Simon Jones of Savills Private Finance says: "The easiest way to finance this is by the sale of the flat, especially as it won't make a profit. The CGT liability will depend on how long the flat was lived in as a main residence as well as the time that it has been used as an investment property. The cost of borrowing £60,000 over 25 years on a repayment basis at a rate of 6 per cent would be around £390 per month."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

News
election 2015The 10 best quotes of the campaign
News
A caravan being used as a polling station in Ford near Salisbury, during the 2010 election
election 2015The Independent's guide to get you through polling day
News
people
Voices
David Blunkett joins the Labour candidate for Redcar Anna Turley on a campaigning visit last month
voicesWhat I learnt from my years in government, by the former Home Secretary David Blunkett
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Editor-in-chief - Financial Services - City, London

    £60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Guru Careers: Management Accountant

    £27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

    Guru Careers: Project Manager / Business Analyst

    £40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

    Day In a Page

    General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

    'We will not sit down with Nicola Sturgeon'

    In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
    VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

    How ordinary Britons celebrated VE Day

    Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
    They came in with William Caxton's printing press, but typefaces still matter in the digital age

    Typefaces still matter in the digital age

    A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
    Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

    'Missing link' between Earth's two life-forms found

    New microbial species tells us something about our dark past, say scientists
    The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

    Pan Am Experience: A 'flight' back to the 70s

    Tim Walker checks in and checks out a four-hour journey with a difference
    Humans aren't alone in indulging in politics - it's everywhere in the animal world

    Humans aren't alone in indulging in politics

    Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
    Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

    Crisp sales are in decline

    As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
    Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

    Ronald McDonald the muse

    A new wave of artists is taking inspiration from the fast food chain
    13 best picnic blankets

    13 best picnic blankets

    Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
    Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

    Barcelona vs Bayern Munich player ratings

    Lionel Messi scores twice - but does he score highest in our ratings?
    Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

    Explosive batsman who sets the range for Kiwis' big guns

    Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
    General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

    Miliband's unlikely journey from hapless geek to heart-throb

    He was meant to be Labour's biggest handicap - but has become almost an asset
    General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

    On the margins

    From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
    Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

    'This is the battle of young Egypt for the future of our country'

    Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
    Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

    Why patients must rely less on doctors

    Improving our own health is the 'blockbuster drug of the century'