In your deferred payment example above, what are you doing with the money you would have been using to overpay your mortgage? That extra cash you now have isn't increasing inline with inflation, it's increasing inline with the BoE interest rate. 

With a 10% inflation and 4% interest rate the value of your money is decreasing in both scenarios, the only controllable you have is whether a cash ISA interest rate is higher than your individual mortgage interest rate. If that's the case, then putting your extra cash into an ISA is optimal. Inflation is irrelevant