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An ISA mortgage is an interest only mortgage,
which uses an ISA as a way of repaying the mortgage at the end of
the term. You pay an agreed sum, either monthly or annually, into
an ISA. At the end of its term, your loan is repaid from the value
of your ISA.
ISA’s are a tax efficient way of repaying your mortgage,
but the final value of your savings is not guaranteed and might
not be sufficient to repay all of what you have borrowed. With ISA
mortgages it is important therefore to ensure that regular
checks are carried out to make sure the policy is performing well
enough to generate sufficient money to repay the mortgage at the
end of the agreed term.
It is important to bear in mind that an ISA does not include life
cover and you are therefore strongly recommended to take out a separate
policy to repay what you owe should you die within the term.
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