Ditching my ISA

[Mercenary Keyboard Warrior]

The irony with that scheme of course being that no one can now save for a house because interest rates are so low lol.

Nonsense.

Easy to save for a house, you take some cash each month and tuck it away, depending if you will be able to save quickly or slowly you decide between short term savings and medium term investments.

A few percentage points in interest payments will make naff all difference in saving for a house deposit.

The scheme achieved its intended aim to bring deposits back from the frankly crazy point they got to where it was becoming normal to need around 30%+, back to a more sustainable 5-10%.
Simply there was a lack of funda available (liquidity) so the banks only lent to the safest they could. More funds (as provided by the scheme) mean't the banks had more money available and could look to increase the risk profile of the people they were lending to.

 

[Beerbaron]

Unlucky. Just signed up for 3% fixed cash isa, and mortgage is 1.39%. Plus 1% cashback on monthly mortgage direct debit through 321 account.

My mortgage is up for renewal in Jan so will be able to get better rates then.

 

[Mr.Stu]

The irony with that scheme of course being that no one can now save for a house because interest rates are so low lol.

People can save regardless of interest rates. The interest received on savings over 3-5 years it might take to save a deposit are largely negligible versus the capital amount dribbled in each month.

 

[Energize]

People can save regardless of interest rates. The interest received on savings over 3-5 years it might take to save a deposit are largely negligible versus the capital amount dribbled in each month.

I wasn't being entirely serious there, but the interest gained could be very significant when the rates were higher.

I for example had a bond paying 7.2%, that adds up to many thousands on a large house deposit over that time-scale.

 

[Mr.Stu]

I wasn't being entirely serious there, but the interest gained could be very significant when the rates were higher.

I for example had a bond paying 7.2%, that adds up to many thousands on a large house deposit over that time-scale.

Point taken, I think we are on the same wave length

I just cringe a little when some folks say "No point saving lol, rates are crap, better off buying X/Y/Z/stuff/crap".

 

[uniQ]

You are only allowed 1 ISA

What has that got to do with the price of peas?

I don't know what that's got to do with my post but I'm well aware you're only allowed 1 ISA.

There's no limit on the number of ISAs you can hold but you can only open and subscribe to one cash ISA and one investment ISA per tax year.

 

[krooton]

1. Withdraw ISA
2. But litecoin mining machine
3. ?????
4. Profit (maybe)

 

[The_Abyss]

Have you used the site before ?

MW

Yep - I've invested with Zopa for over a year now. Very good website functionality and visibility over your loan book. The debtors that defaulted over that time were less than 0.1%.

P2P lenders are a nice alternative to cash savings, but never for one minute think that your money is secure. It isn't.

 

[Saytan]

Now is definitely a time for paying down debts rather than increasing savings. I'm only saving because i have no debts.

 

[Energizer Bunny]

False... You can take money out and put it back in, but you're only allowed to deposit X amount per year. I see where you are coming from, but I have taken money out and put it back in later (I always come in under the top amount you're allowed to deposit)

Ok captain semantics you've got me

I should have said on the assumption you have fully used your ISA allowance, you can't withdraw and then pay back in. ISAs have a turnstile on cash that only goes one way and once you have put the allowance in you can't withdraw it.

OP: What you do with your cash is your business but you can get a much better rate by shopping about. You can have an instant access ISA paying around 2% and if you can lock the money up for a few years that goes up to more than 3%. The other option is to convert it into a stocks and shares ISA where the returns can be much higher.

The point you have to remember with an ISA is that you have to add back the tax you would have paid to see what return you need in moving the funds elsewhere. If (for the sake of arguement) you are a 40% tax rate payer then to get the same return as a 2% ISA an account you need a rate of 3.3% in a non tax efficient account. I'm not saying that is unachievable but it is a significant factor.

 

[Mr-White]

Yep - I've invested with Zopa for over a year now. Very good website functionality and visibility over your loan book. The debtors that defaulted over that time were less than 0.1%..

If you don't mind me asking, how much have you invested, for how long and what return did you get ?

MW

 

[covenantuk]

Yup I'm putting all my ISAs into my offset mortgage when the deals run out. If you have a LOT of cash in ISAs then the decision is a little more difficult, but imo for anyone with up to 2-3 years worth you'll be able to run up ISA holdings easily enough if/when rates start to climb again

Remember that if you're a higher rate taxpayer, the value of an ISA is higher in real terms.

 

[The_Abyss]

If you don't mind me asking, how much have you invested, for how long and what return did you get ?

MW

Over £15,000 for the past 18 months. The return so far has been just over 4% net after higher rate tax.

 

[qqg3]

Over £15,000 for the past 18 months. The return so far has been just over 4% net after higher rate tax.

How involved do you have to be? Or is it as simple as setting up some preferences and handing them the cash?

 

[Rroff]

Wow cash ISAs really have taken a dump - looking around at current offerings and nothing even comes close to my current one's interest rate and thats down quite a bit from the original fixed term rate.

 

[deko]

You are only allowed 1 ISA

You're only allowed 1 Isa? ****

Aw, you mean you can only open a new ISA once per tax year. You just made me **** myself thinking "Why were the bank quite happy for me to have 2 open?"

 

[beamer]

Those "frankly crazy" 30%+ deposit requirements reflected how much house prices still needed to fall to become anything like sustainably affordable. Now the schemes are ending the frankly sane deposit levels will return, reducing as house prices fall ... Only question now is how quickly that fall happens.

Nonsense.

Easy to save for a house, you take some cash each month and tuck it away, depending if you will be able to save quickly or slowly you decide between short term savings and medium term investments.

A few percentage points in interest payments will make naff all difference in saving for a house deposit.

The scheme achieved its intended aim to bring deposits back from the frankly crazy point they got to where it was becoming normal to need around 30%+, back to a more sustainable 5-10%.
Simply there was a lack of funda available (liquidity) so the banks only lent to the safest they could. More funds (as provided by the scheme) mean't the banks had more money available and could look to increase the risk profile of the people they were lending to.

 

[Mercenary Keyboard Warrior]

Those "frankly crazy" 30%+ deposit requirements reflected how much house prices still needed to fall to become anything like sustainably affordable. Now the schemes are ending the frankly sane deposit levels will return, reducing as house prices fall ... Only question now is how quickly that fall happens.

They have been back down at 10% levels for ages. Even the odd 5% quickly appeared.
They fell almost immediately the cash was made available under funding for lending.

The 30%+ was nothing to do with overvalue it was that supply was limited.
Why would you lend to someone with 5% deposit and the inherent risk when you could lend to someone with 50% equity and basically lend it risk free.
Yes the risk of someone with 5% is that prices fall more than 5% and then they default but the reason for high depostits was not an overvaluation per se in house prices. A soon as supply limitation was removed normal service was resumed and mortgages became available again and savers rates plumeted since lenders had a cheap and almost limitless cash reserve to pull on (the BOE), up until that point post financial crash, cash was in short supply and rates to lenders were in effective terms quite high (competition for savers deposits)

 

[Mercenary Keyboard Warrior]

I don't think we will see a house price crash, I don't think the government/BOE will allow that to happen. And it only happens if people are forced to sell.
What we really need is a period of stability will little house inflation. We haven't had far off this for quite a few years (bar inner London). Some correction has continued elsewhere but a few points isn't significant.
Plenty of people are not financially secure, lots of people may be in slight neg eq or have very little real equity in property. Add to that the expectation of some interest rate rises and some people look very precarious. Labour can bleat all they like about a cost of living crisis but they were in power when the biggest impact for a long time took hold which was the cost to purchase or rent a home. Thats has been temporarily put on hold for now for hom******s with ultra low interest rates, once they return to "normal" its going to have a massive impact on anyone struggling right now.

 

[aardvark]

mercenary keyboard warrior speaks sense.