New contributor Longshore Drift is back to explain how having a Flexible ISA in his armoury enabled his family to secure their dream home.
After years of vaguely searching, my wife and I suddenly found the house we wanted.
A big garden to swap for our terrace with its five metre square yard in London. An unlikely place – tired, but surrounded by beautiful tall trees. “A single story home of unique design,” according to the agent.
In other words: a 1950s bungalow with a demented layout.
Two hours from London, this bungalow had plenty of space for us, our stuff, the kids, and the dog. Decent schools. A garage that might become a gym and a workshop. Walking distance from a big river.
All of a sudden the abstract notion of moving became real and it required an action plan.
The sellers of the house, like so many since the pandemic, were only interested in engaging with buyers who were, in estate agent jargon, ‘proceedable’.
A second visit confirmed our interest. But were we just wasting everybody’s time? Turning the aimless Rightmove scroll into a real-life experience that was still somehow no closer to happening?
Find funds fast
Our own house was not on the market and not ready to be sold. But we needed to move quickly.
Suddenly all the little jobs around the place that I’d put off for years had to be done. However it was our finances that were in most immediate need of work.
To get this house – the first one we had seriously pursued in more than five years of on-off searching – we’d have to demonstrate that we had the means to buy it. We needed to show that the purchase was not contingent on the sale of our house. That we were serious people. That we had the money.
We were faced with two unpalatable options:
- Get a colossal white-knuckle mortgage, and try to suppress all thoughts of Liz Truss-style fiscal events.
- Get just a very large mortgage while also taking the beloved and hard-won ISAs that we had carefully accumulated for years out back and quietly liquidating them.
The horror!
ISA reluctant withdrawer
I was slow to take pensions seriously. As a consequence, ISAs are a big part of how I plan to keep the lights on when I’m no longer seen as economically viable in the Logan’s Run world of work.
And that could be sooner than I hope. The fear is real.
Yes, dear reader, I am over-45.
Hence I was haunted by the prospect of losing my ISAs – or more particularly the large tax-sheltering capacity that I’d built up over years of diligently using my annual ISA allowance. Decades of future precious compounding lost in an instant. My DIY pension plans unravelled.
After digging around, however, I learned of an exotic variant of the ISA. Something called a Flexible ISA. Created by government mandate in 2016, a Flexible ISA allows ISA funds to be removed and repaid, retaining their tax-free status as long as the money is returned within the same financial year.
This is the closest thing to Johnsonian magical economics I’ve seen in the real world. We could have our cake and eat it – just so long as we promptly coughed it all back up by year’s end.
It could be done! You can’t invest your pension funds in your own house, but you can give yourself a bridging loan from your Flexible ISA.
Now find your flex
‘Mandated by government’ does not mean ‘offered by every ISA supplier’. Banks are not required to offer this ISA flexibility. Most don’t.
My existing ISAs were inflexible: money exiting to the real world would be banished from the tax shelter for all eternity.
So I went on the hunt. After getting a flat “no” from Interactive Investor, Hargreaves Lansdown, Smile, and Starling, I found one with Yorkshire Building Society and promptly opened an account.
This facility could enable us to secure our new home despite the UK’s notoriously protracted house buying process. If we timed our transaction for just after the new financial year starting 6 April, we would have up to 12 months to sell our house and shepherd the cash released back into our flexible ISAs.
We made our offer in January. A transaction early in the new financial year was a realistic prospect. By combining this DIY financial engineering with an offset mortgage (another rare beast) we could do it.
True, if the sale of our house hit problems and things got strung out then it could get a bit hairy. Cash Cinderella must be back home in the ISA by midnight before the tax year ends on 5 April!
Rachel Reeves is not the Wicked Witch, but she’s no Fairy Godmother, either.
Fortune favours
It’s difficult to overstate the importance of our discovering this option, psychologically.
Instead of having to swap one dream for another – a decent retirement for a family home – we could achieve both. The plan gave us the courage to make an offer.
We proved our funds in our existing ISAs, showing the current holdings. After a bit of haggling we agreed a price, secured the house, and got it off the market.
It was the flexible ISAs at our backs that made the stretch a real, practical prospect.
Our Bridge-o-Matic manoeuvre in summary:
| Bridge lending plan | New house cost (inc. Stamp Duty) | Mortgage debt (Offset) | Flexible ISA funds | Old house yield (after fees) |
| Purchase | -£1,200,000 | £800,000 | £400,000 | |
| Sale | -£800,000 | £800,000 | ||
| End state | £1,200,000 | -£400,000 | £400,000 |
So that was the roadmap. Long story short though: we got lucky.
We were able to sell our house very quickly, and so we did not actually need to release the ISA cash.
Still, without this flexible flex as an option we might never have had the confidence to act. We would have missed the house and we’d probably still be aimlessly thumbing our way through Rightmove.
The plan: using a flexible ISA as a bridging loan
Here’s a recap:
- Take statements or screenshots of your ISAs, demonstrate their chunky dimensions to your sceptical seller, be seen as serious people, and have your offer accepted.
- You may now PROCEED!
- Liquidate your ISA investments. A great opportunity to test those – ahem – unfailing instincts for perfect market timing. (Only kidding – indeed being out of the market for a spell is a downside.)
- Use your flexible ISA to spit out the necessary cash – or transfer your existing ISAs to a flexible one that will. The sooner you do it after 6 April, the more time you have to use the money and refund it.
- Buy the house with a mortgage that is now slightly less terrifying.
- Sell your old house and send a chunk of cash back into your flexible ISA, before the tax year taps out.
- Reinvest the ISA money in the
happy bag of meme stocks and crypto ETPslow-cost global trackers that filled your ISA in the first place. - Set any leftover cash against your offset mortgage.
…and start breathing normally again.
Net, flex and chill
Some providers offer flexible ISAs as standard. Many others do not offer them at all.
Given my investment platform declined to offer one, the most practical way for me to use this flexible approach was to sell my investments in my inflexible ISA, transfer the cash to my new flexible ISA provider, and then withdraw the cash.
Again, if you are planning to do this and want the best chance of getting your ISA money back to safety in time, then withdrawing not long after 6 April is your best option. (Another reason for people to pile back into the housing market in the new year?)
While still not widely available today, perhaps there will be more competition for flexible ISAs in the future.
I know that Starling, for one, has begun quietly offering them to some existing customers, though there is nothing on the website right now.
Gimme shelter
You may find your existing ISA already has these magical bridging, property-acquiring properties. If not then it’s worth considering opening one that does with at least some of your ISA allowance – just in case you need the flexibility someday.
You could turn out to be the most generous lender you can find.
Our own flexible accounts are still there, ready to go if we need a chunk of cash.
But please don’t tell any estate agents. We’ve only just finished unpacking from this last move.
Further reading:
- How The Investor demonstrated the value of his investments to secure a big mortgage and hence retain his precious ISAs.
Doubtless, there are many others as well, but Freetrade, for one, has a flexible stocks and shares account that they offer, although this is not really useful for returns on cash holdings within it, because even though the interest rate is currently 5%, the level of how much of the cash holding to which this can apply is set quite low.
Another variation on Longshore Drift’s approach, if keeping money tax-shielded is important to you, could be to find an Offset Mortgage provider which allows you to offset the value of certain cash ISAs. Of course the trade off is that your effective return may be considered to be the interest rate on the mortgage (given the potential reduction in monthly payments), rather than the return on other investments, also there may be a premium for taking this approach in terms of the mortgage rate and fees.
A great article demonstrating the beauty of flexible ISAs, thanks Longshore Drift. A couple of further thoughts in case anyone’s interested:
1. If you take income from your flexible ISA this counts as a withdrawal that you can top back up before the end of the tax year as well if you have additional spare capital to protect.
2. If you want to be really nerdy about maintaining market exposure during a switch between ISA providers or while you have ‘borrowed’ your money to bridge another transaction you can always consider a broad market CFD contract. I’m not brave enough to use them as part of an investment strategy but for managing short term risk (by creating it when you’re out of the market) they may have a place in an individual portfolio. Tread carefully and make sure you know what you’re buying to avoid nasty surprises!
Vanguard has a flexible ISA as well.
We’ve been using this as a way to get to see properties despite not having our house on the market. We’re looking for the magic castle as our forever home and far from where we live now, so it’s taking ages to find it.
Timing is the key as you say. We’ve just seen a house, but I need to have the conversation about whether they would still be interested in waiting 4 months to complete.
When I started scouting for flex ISAs, the other thing to watch carefully is/are (?) exit fees. The flexible ISA platform may not be your ideal for longer term holding (e.g. investment choice, fees etc). So one needs to factor in the practicalities and costs of possibly moving somewhere afterwards.
But compared to bridging loan costs, this is usually in the noise.
InvestEngine also offer a flexible ISA. As does Barclays Smart Investor.
You can also use a flexible ISA to avoid capital gains tax on SAYE https://www.gov.uk/tax-employee-share-schemes/save-as-you-earn-saye . It’s supposed to let you avoid capital gains on up to £20k per year, but with a flexible ISA you can withdraw money to increase your CGT evasion limit.
I’m using Charles Stanley for that purpose, great for floating tax and pension payments depending on circumstances.
Definitely worth having at least some of your ISA in a flexible one. It’s a shame that most of the big platforms don’t offer them.
Building on comments above, when I last looked into it the flexible options I considered were:
Vanguard – fee reasonable but uncapped, good to have funds and ETFs available
Freetrade – now free, or even if you pay for the new fund range, not expensive
IG – ETFs only but reasonable fees
Charles Stanley and Barclays – both a bit expensive?
Invest Engine – looks good but ETFs only and not sure I’d want to use them for a large balance
Moneyfarm – low cost, ETFs and funds, but a limited range
This whole article is giving me twitchy conniptions.
In-laws wanted to downsize, move closer to us (mainly my toolbox and decent hospitals) and found the ideal house, paid for survey, put in an offer, and then lost their sale. I did the “bank of son in law”, said we’d lend the money, loads of time until end of tax year to get things back into flexible ISAs, it’s “only” £400k, it’ll be fine.
They got another buyer, yay!, and then on the run up to Christmas, that buyer fell through and I was made redundant.
We didn’t/couldn’t tell them about redundancy as already a wall of guilt, I was having to make 40 UK people under me redundant (plus 25 overseas with differing levels of ease/complexity), and even with a lot of using other assets (offset mortgage, NS&I linkers, etc.), it was looking like no way could we get the money back into the ISAs in time.
And then in the March they got their dream buyer, paid back the loan to us, ISAs restuffed, and a degree of honesty could ensue.
A few years afterwards, my parents downsized, and it wasn’t quite as traumatic but still two sales that fell though. Oh, and my father pulled all the money out of his/their ISAs and then found the provider had decided that as Flexible was optional, they weren’t doing it.
Flexible ISAs are great, but that cut off date can introduce a degree of stress.
“A single story home” So clearly American. How then can it be two hours from London?
Anyway, is a two hour distance from London enough for civilised people like yourselves?
But seriously, flexible S&S ISAs are also available at the BestInvest platform and at the Manchester broking firm Pillings.
Flexible cash ISAs you can find at Lloyds Bank and at the BSs Nationwide, Skipton, and Principality.
There maybe plenty more – some are identified in the Monevator platforms comparison table.
Nice article. I’m planning to do something like this in the next couple of years, primarily because I find the idea of everybody having to move everything all in one day utterly horrifying. Even worse if you want to buy a fixer upper and have to live in it, or in a caravan, while the builders bash it all up and put it back together again.
To add to the list of flexible ISAs, T212 is flexible (cash and S+S).
And last time I looked, Barclays offered an offset mortgage with the option of offsetting ISA savings. Not the best rates though (the nature of the offset beast), but I suppose it depends how much you have to offset.
On a much (much!) more modest scale the Nationwide Flex Regular Saver lets you pull money out and put it back in again as long as you do it within the same month.
We thought we’d try the lark over the period April 4th to 6th. But the amounts are piddling unless money is tight. Which it looks as if it might be for BOMD reasons.
Separately we’ve noticed that Regular Savers do pay awfully good interest rates to the extent that we are tempted to take cash out of Flexible ISAs every month and stick it into RSs. Then just before April 5th take the money out of RSs and bung it back into the Flexible ISAs. I think of this as a way of gearing the return on cash. I’m tempted to give it a try. The idea of gearing cash appeals enormously.
I have used a flexible ISA as a bridging loan myself (with a much smaller amount to bridge), I think originally inspired by the linked Finumus article. It worked out nicely, except that we didn’t manage to sell our old house in time. But as Finumus points out, you only need to repay the money for one night (well, more realistically a few days) and can use a much more expensive source of finance. And the worst that could happen was the loss of the ISA allowance.
@Tetromino – Vanguard fees are capped at £375.
This is great, thank you. But doesn’t buying one house before selling the first make you liable for a higher rate of stamp duty (and possibly temporarily council tax?)
@Sundar Ah, yes, thanks for the correction. I should have said high cap rather than no cap, but I suppose that depends on the balance of the account – the cap could certainly be helpful at larger balances.
‘Ease of transfer’ also feels relevant to these discussions, and on that front Vanguard seems to do quite well, at least for ISA transfers in, for which they have a good system that is paperless where possible.
My first thought on this was what about 2nd home stamp duty, which would be an extra £60k. But having checked it there’s a 3 year window for you to sell your property where you can reclaim the extra stamp duty, which I didn’t know about. Leaving this comment for others who didn’t know this too!
Between that and the flexible ISA I am learning a lot today, and it makes the idea of buying another house a slightly less scary proposition for me, so thank you for the article, got me thinking!
@CT #15 > But doesn’t buying one house before selling the first make you liable for a higher rate of stamp duty
It does. But you can reclaim this if you sell your old house within three years. Assuming, that is, you then end up with just one primary residence.
I used this flexible ISA trick to produce a bridging loan when I bought the new house before selling the old, and the reclaim of SDLT worked okay too.
Thanks, Longshore Drift, for an excellent article.
I wish I’d known about this a couple of years ago when I was last looking to move house.
In case strength in numbers is a useful indicator – I’ve also done the retrospective SDLT rebate. It was completely painless.
I’d probably be willing to pay 1% fee to borrow my ISA allowance/pot for a couple of weeks to maintain the benefits. Had a quick look but didn’t see anything obvious available – sounds like a business opportunity circa 26% APR
Very good article and a reminder of how very useful it’ll be to me in couple of years time.
Monevator subscription itself is worth it when I can come across very useful info like this even though this wasn’t members only article, still glad to be contributing 🙂
Thank you for your comments. Useful to get a few more names of Flexible ISA providers out there. Also a good point @white sheep that you can bridge your own bridge loan for a few days if necessary. @gadgetmind offers a useful reminder of how uncomfortable it can get when a series of things go wrong. I think this approach was a practical one for us, but the critical thing here was that the availability of this option completely changed the my approach to buying a house. It was a huge confidence boost. The opportunity would have passed otherwise. @Drearieme — not even the estate agent was American… @Gov I hope it is useful, I had felt quite stuck in terms of making a move, but this gave me the fleetness of foot that I had only enjoyed when buying chain-free years before. Stamp duty should be reclaimable as others have set out. You know you don’t even get a stamp…
@Gov — Thanks for being a Monevator member, and agreed it’s definitely what helps keep much of the free site free!
The fundamentals are being hammered there with Google algo changes and more recently AI search destroying referral traffic to this and most other websites, so we’ll have to see how long it is sustainable for to publish the majority of stuff for free, let alone all the archives. But for now it’s membership that supports it. 🙂 Cheers again!
Hi all, I have used the Vanguard flexible ISA as bridging finance for moving houses in mid 2025, and I can confirm it works as described. I did need to pay second home stamp duty, so make sure you allow for that in your cash flow calcs, but as Ermine says, that is refunded once you sell your old house (within 3 years, which I now have).
Since this is my first comment, I’ll take the opportunity to say thanks to all of you, and especially the Investor + Accumulator, for all your knowledge that makes Monevator great.
Cheers, Skipy
This wasn’t quite available to me last time I moved and I used an offset mortgage instead so that I could keep my ISAs. The lender was cautious and wanted to be sure that I could keep up repayment style payments if both the sale didn’t go through and the ISA went to zero, and what would I do if … type questions. Flexi access ISA would have been much better (eg better loan to value ratio on mortgage rates), if timings also worked out etc.
Reclaiming the extra stamp duty was straightforward.
Interesting, a clever use of the ISA.
Just to add a recommendation for Vanguard’s ISA which is indeed flexible as others have pointed out. Their service has always been excellent over the years through various transfers etc.
Brief Post-Budget Update
The plans set out here hinge on either having funds in a flexible ISA, or being able to move your inflexible ISA money into one. From April 2027 if you need to move your money you will not be able to send that cash to a Cash ISA from a S&S ISA, a rule designed to prevent you washing your £20K allowance from a S&S ISA into an interest-earning cash one. I have asked my ISA provider to address this and make its S&S ISA flexible. If they don’t do so, then I will soon find another…
@Longshore Drift — Thanks for the update. So net-net it’s going to become a slightly riskier and consequential proposition I guess, depending on how exactly the rules on cash-like investments in a S&S ISA are enacted.
(Assuming the whole thing isn’t scrapped for the giant waste of time and effort it promises to be.)