What is an ISA mortgage in the United Kingdom?
The essence of this type of account follows from its name. Therefore, we can give the following definition:
An ISA mortgage is a type of mortgage where the borrower uses an Individual Savings Account (ISA) to save money and pay off the mortgage at the end of the term.
Let's consider the main features of mortgage savings accounts:
- Interest-only mortgage. When you take out a mortgage ISA, you only pay the interest on the mortgage loan each month. That is, the credit burden on your budget is much smaller than with a conventional mortgage
- Savings ISA: You regularly save money in a tax-free ISA.
- Repayment at the end of the term: With a savings account, you can accumulate enough savings to pay off the mortgage at the end of the mortgage term.
Calculate future income on a 1-year term deposit (example):
| Amount, $ | Rate, % | Accrued %, $ |
| 25,000 | 4.30% | 1,075 |
| 25,000 | 4.35% | 1,088 |
| 25,000 | 4.40% | 1,100 |
| 50,000 | 4.80% | 2,400 |
| 50,000 | 4.85% | 2,425 |
| 50,000 | 4.90% | 2,450 |
| 100,000 | 5.30% | 5,300 |
| 100,000 | 5.35% | 5,350 |
| 100,000 | 5.40% | 5,400 |
| 200,000 | 4.80% | 9,600 |
| 200,000 | 4.85% | 9,700 |
| 200,000 | 4.95% | 9,900 |
What are the main types of ISA used for such a mortgage:
- Cash ISA: Interest on this savings account is tax-free.
- Stocks and Shares ISAs: By choosing this type of investment in company shares, you can get a higher level of income, but the risk is slightly higher
Therefore, when choosing a mortgage savings account, it is worth carefully calculating whether your savings will grow enough to cover the mortgage.
You can see the similar FAQ at the link:
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Details of companies offering the financial services:
Aldermore Bank
Head office’s address: Apex Plaza, Forbury Road, Reading, RG1 1AX
Phone: +44 20 7788 6699
Web-site: http://www.aldermore.co.uk/
Swift code: ALDBGB2P
Reference number: 204503
Stock code: 51WB
ABN: 00947662
BSB: ALD
Halifax
Head office’s address: The Mound, Edinburgh EH1 1YZ
Contact center: 0345-720-3040
Phone: +44 (011) 3242 19 84
Web-site: http://www.halifax.co.uk/
Stock code: HALP
HSBC Bank
Head office’s address: Unit 8, Canada Square, Retail, London E14 5AH
Phone: +44 345 740 4404
Web-site: https://www.hsbc.co.uk/
Swift code: HBUKGB4B
Reference number: 114216
Stock code: HSBA
ABN: 00014259
BSB: HBUK
Melton Building Society
Head office’s address: Mutual House, Leicester Rd, Melton Mowbray
Phone: +44 1664-414141
Web-site: https://www.themelton.co.uk/
OakNorth Bank
Head office’s address: 57 Broadwick Street London, WIF 9QS, UK
Contact center: 0161-713-4071
Phone: +44 330 380 1181
Web-site: https://oaknorth.co.uk/
Swift code: OAKNGB22
Reference number: 629564
ABN: 8595042
BSB: OAKN
Saffron Building Society
Head office’s address: 1A Market St, Saffron Walden CB10 1HX
Phone: +44-1799-520606
Web-site: https://www.saffronbs.co.uk/
Scotish Building Society
Head office’s address: 93 Dalry Rd, Edinburgh, Edinburgh, EH11 2EF, United Kingdom
Contact center: 0333-207-4007
Web-site: https://www.scottishbs.co.uk/
Skipton Building Society
Head office’s address: 71 High Holborn, London WC1V 6EA
Phone: +44 20-7242-8147
Web-site: https://www.skipton.co.uk/