I'm in the fortunate position of having about £500 per month that I can save. Currently I save £300 each month into my cash ISA (admittedly, the ISA product isn't a market leader, but I can't do anything about that during this financial year, but will do for next), and the remaining £200 I overpay off my mortgage (lifetime tracker at BoE + 0.49%) which is penalty free and I can borrow the overpayments back if needed...

Firstly, given that currently my mortgage rate is BoE + 0.49 = 5.49%, and my ISA is ~0.5% less than that... am I right in thinking I'd be better maxing out the mortgage then putting any remainder in the ISA rather than the other way around?

Secondly, Could I be doing anything better than the above scenario?

Cheers in advance!

SM.

Hi --- Personally I would reduce the mortgage monthly by as much as is permitted without penalty in the above situation, which makes a big difference to your total interest paid over the mortgage term, forget making payments into the ISA. ! the interest you are paying on the mortgage is currently negating the savings interest....

Then consider transferring the ISA balance to a Hi Save account below for a 7.2% return, with top ups as and when you can.

http://www.icicibank.co.uk/hisave_fixedrate.html

It's better to take the tax hit on savings if the interest rate is high enough, in comparison to a poor performance tax free ISA.

Additionally if you're married/civil partnership and your partner is a non-tax payer, place the savings into their name.... utilising their tax free personal allowance, then register to receive the interest on the savings paid gross.

Thousands of investors could save paying any tax on their savings, if they were to make this simple legitimate adjustment to their investments where possible....especially when your partner can be trusted. : -- )