Borrowing more as safety net

Hi all. We are completing soon having exchanged. Until now we’ve based all the maths driving how much we borrow on the mortgage upon 1) setting aside £10-20k for a rainy day (really the bare minimum) and 2) then a pot for some work that needs doing on the house.

We’re now considering borrowing even more - purely as a further safety net & given the 10-20k rainy day fund feels quite light & we feel it could be burnt through quite quickly eg if any issues with job or one off additional costs we can’t control. The logic is we could invest the extra we borrow in an ISA at around 5% and the rate on our mortgage is 4%. We are also in the fortunate position where we’ve got a fair bit of headroom to borrow further without going beyond the LTV limit for that mortgage rate.

In theory if rates on ISAs drop to the extent we are running a big deficit on what we earn on the extra borrowing vs what we pay, we could repay the extra borrowing as we’d be within 10% of the total value of the mortgage

Technically the additional mortgage payment will only just about be offset by the interest on the ISA as I think mortgage payments don’t just increase by the extra interest, due to how the banks calculate the flat payment over the mortgage term. But I think that’s manageable for us even we ran a small deficit.

So it seems a good idea to borrow that further safety net.

That said every instinct is to minimise borrowing whereever we can!

Just wondered if anyone has any thoughts or challenges on our thinking? Any advice appreciated. Many thanks.

Edit: adding that the additional safety net we are considering borrowing has already been approved as part of the original mortgage offer (our broker advised to request the max we could conceive of needing at the time)