Help!! mortgage advice needed..........

geordiemag

Hi

Apologies about the length of the post but can anyone give us some advice on the best way forward please?

Our current outstanding mortgage is £66k (£31k repayment, £35k interest only) on a fixed rate of 5.69% (the fix still has 5 years to run), which is due to be repaid in 10.5 years. Current redemption penalty would be £1500.

The interest only element is covered by 2 endowments, both which mature in approx 10.5 years:
No 1
Friend Provident (formerly London & Manchester)
Sum Assured £18k
Mthly prem £40
Surrender value (as of today) £6,795
Anticipated maturity value @ 6% = £16,300
Allocation statement mentions both accumilation and capital units

No 2
Prudential (formerly Scottish Amicable)
Sum assured £23k
Mthly prem (incl life cover) £65
Surrender value (as of today) £7,243
Anticipated maturity value @ 6% = £22,000
statement identifies both with profits and unit linked funds

Based on my basic calcs, selling the endowments and investing (alongside current mthly premiums) at 6% pa (in line with forecasts) would result in a surplus of £7k over forecast. Investing at 5% (cash ISA)would produce an additional £3k over forecasts.

Basically we're looking for options to pay mortgage off as early as possible but a little confused as to best way forward. Options discussed so far are:
*remortgaging, not cashing in endowments,
*staying with current mortgage provider, cashing in (or selling) endowments,
*remortgaging, cashing in (or selling endowments).

Are the endowments worth keeping (I think we already know the answer to this one)? Are they suitable for selling? If they were cashed in / sold, would there be any problem convincing a new lender (or even existing lender) that we are disciplined enough not to access this money?

Talk about not being able to see the wood for the trees.........

Any advice welcome.

Barney088

I'd advise you to see an IFA who can talk about the "best thing to do with the endowments".

There are alot of sums to do here, is it cheaper to pay a repayment mortgage and sell the policies that could only be honestly answered with a full review.