Pay lump sum on Mortgage, advice

jackswan

I recently won a case for a mis-sold endowment and am now thinking which way to use this and another investment to pay off a large portion of my mortgage.

I have a £50000 interest only mortgage, which has an endowment and a Halifax ISA homeplan(received a projection on this one a few weeks ago and there will be a slight shortfall, but I am actually paying £50 a month extra, which has not been taken into account) covering equal halves of the mortgage.

The endowment compensation is approx. £13000 and at the moment the ISA's are worth approx. £8300 .

I am thinking about using both to pay off a large chunk of the mortgage and then convert the remainder to a repayment. I am presently tied into a very low fixed rate, so will have to pay a penalty of approx £750 as a result of making a lump sum payment of approx £21300.
When I remortgaged 18 months ago, the money that I saved per month from the previous lender has gone into a savings account, so there is some more there also to be used to offset against it.

So at the moment the cost of the mortgage inclusive of interest, endowment, Halifax ISA (this has only been running for 5 years) and the extra which I save is approx £430 per month.
If I was to cash all policies in this would reduce the mortgage down to around £29000 and with 9 years left this would cost about £330 a month and I know that the mortgage would be paid off.
Just wondering if this would be the best way to go about it and I can also afford to make overpayments, therefore reducing the term further.

Any advice would be much appreciated.
I am actually thinking of seeing an independent financial advisor, but don't really know which way to approach one as regards the above.

So any advice would be much appreciated.

dunstonh

There is no right or wrong to whatever you do here. It comes down to how you feel. If you prefer the safe method, then go with that. If you prefer to leave the ISA part running due to potential future returns but understand there is still a risk, then fine. If its a halifax ISA, I would be more inclined to look at switching to another ISA provider if you decide on that route.

You can get the ISA cheaper and a better range of funds.

jackswan

Thanks for the reply.
As regards the ISA with the Halifax, the recent review letter gave a projected shortfall of £3500 at a rate of 5% each year, £300 at a rate of 7% and a surplus of £3400 at 9% and at the moment it has probably just made a few hundred pounds more than I have actually paid into it.
They are invested into The Halifax UK growth fund retail share class B accumulation shares. So I am thinking that it would be better to cash it in (there are no charges) and pay the lump sum off the mortgage.

After going through the experience with the endowment, I just want the mortgage paid off in 9 years time.

I have also heard this morning that the endowment provider will also pay £386 which is the penalty for paying off the compensation from the original motgage advance and also allowing me to sell the policy myself if I can get more for it.
My next question is, are there any good companies that sell endowment policies?