Endowment or ISA and mortgage assurance

joAnn

My discounted rate with Nationwide is due to end in December, and as I have changed jobs with a lower salary, I cannot shop around for a new deal. I am considering switching to interest only with my new rate and am trying to weigh up the dis/advantages of ISA or endowment as a means on repaying the capital in 25yrs. Nationwide also advised I can use the sale of my property to pay this, but in the current climate, I would also like to have a more secure plan.
Can anyone give some clear benefits of each type of plan and is there any indication of what might be best for me. My p/t salary is £16,633, which I supplement with cash jobs, in addition, child benefit & Tax credits are £110 p.m. I am also planning to take on another P/T job - shouldn't be a problem, I can pick up work as a supply teacher in London.
Secondly, I am paying mortgage self assurance which I took out when I bought my previous property in 2003. It started as a reducing sum of £127,200. My outstanding balance on my new mortgage is £128,579 and I am paying approx £20 per month . I am a 34 year old female non smoker with 1 dependent. Could I be paying too much?
Thanks
Any advice or suggestions very welcome - I am bamboozled with the info on here!
Thanks!

joAnn

up............

dimbo61

Hi joAnn,
You owe £128,579 on your home and earn £16,633 plus tax credits, child benefit and cash jobs ( when you can get them and fit them round child care ! ) and you live ( survive ) in london.
You will really struggle to get another mortgage off any lender so you may well end up with whatever Nationwide will offer you in December even if that means there Standard Variable Rate.
I would sell up and move to a cheaper part of the country ( but I think London is a very expensive place to live and not very nice either ! )
Do you get help from your childs father ?
If the Nationwide will allow you to go IO then do that and build up savings in cash ISA,s
£20 a month for life assurance is not bad
You may well have to sell up and move to a smaller home/flat or cheaper area to clear your mortgage in 20/25 years but is that so bad !
Retire to the cheshire countryside is very nice up here and schools not bad either GOOD LUCK

grogdog

you need to work out the figures , but nationwide are good and offer existing clients their whole product range so you probably wouldnt get much better elsewhere , but on the income you state noone else would give you a mortgage.

if you change to interest only and start an isa to cover 128k you will be paying a similar amount than you would do on a repayment mortgage.

your life cover is not expensive but it is on a decreasing term assurance which will be no use to you if you change to interest only.

EdInvestor

Rather than starting an endowment (now unavailable - obsolete) or an investment ISA ( a cash ISA is not the right one), you would get a similar or better return without talking a risk by overpaying the mortgage. IIRC Nationwide allows overpayments up to 500 a month without penalty?

So if you have some spare money, just throw it at the loan. You get a return at the prevailing interest rate and it's tax free.You'll pay much less interest over the 25 years if you can steadily chip away at the I/O mortgage in this way, while at the same having the flexibility to stop overpaying if times are tight..

dimbo61

Try cavendish online for level term life assurance as very cheap and you pick which company you want
Good Luck

joAnn

Thanks very much for the comments - Dimbo, selling is not an option, but would make sense!
Didn't realise that endowment no longer available, I think I will go interest only and set up an ISA - isn't interest paid on these; but also throw spare money at the mortgage (when it comes!) I do not intend for the low salary to be anything more than a temporary situation.
Will look at Cavendish - whats level term assurance?