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ISA Mortgages
The ISA (individual savings account) mortgage took over from the PEP mortgage over a period of time during 1999/2000. An ISA mortgage pays a tax-free* lump sum at the end of the mortgage term, which the borrower uses to repay the total loan capital, having paid interest only for the life of the mortgage.
ISA mortgages do not come with life assurance like endowment mortgages so you might consider taking out a mortgage protection policy.
The ISA’s available invest in cash (like a building society), stocks and shares and life insurance. Usually ISA mortgages are flexible meaning you could pay the mortgage off early and make savings.
In any one-year you are able to invest in one maxi ISA or three mini ISA’s. The maximum you can invest in any one tax year is £7000, although this may change in the future.
*This may change with legislation.
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