Which option? Help needed please.

adandem

Hi,
We are looking to ditch our fix, based on some of the current deals I believe it's a good option for us even when adding the ERC's to the mortgage.

We would be ditching a 5 year fix 5.99%, £82k mortgage with a , £25k interest only. 20 years remaining. Our LTV is approx. 40%.

We have looked at the 3.99% 5 year fix. However, we don't know whether we should revert all the mortgage to repayment and ditch our endowment as the NU payouts now look quite unlikely.

The endowment is £50 per month for the next 15 years. I don't have all the figures for the policy but the policies were intended to pay off a £38k mortgage so we have put more on repayment to compensate for a shortfall.

I am not very good a spreadsheets etc. and was hoping someone could possibly help?
Thanks;)

Peelerfart

I think you need to get the figures and post them here there are some very,very good guys here for endowments,but they need to see the figures.

Please dont rush into something you may regret, take some time .

Valli

Personally (and this is MY experience and not advice for you AT ALL because we don't have any figures for how your endowment is performing) I ditched my endowments (am still paying them but they are no longer assigned) and went for a repayment - well one is paid up now.
Then I DID A STUPID THING AND FIXED.
Problem with these decisions is no-one knows what is going to happen but repayment is the way to go...and if you are in a position to overpay you would crack it.
My first endowment came in at £13 less than it should have. Yes £13.
So I didn't do too badly on that one.

dimbo61

Hi!
Your £82,000 repayment mortgage is costing you approx £587 a month
your £25,000 interest only mortgage is costing you approx £125 a month
Total cost of both parts is £ 712 a month
If you took out a new 5 year deal with A&L at 3.99% NO FEES for all the mortgage repayment £107,000 it would cost you £647.84 a month.
At the end of the 5 years you would owe £87,641.61
This would save you approx £50 a month or the cost of your endowment !!
cant comment on the endowment as it may recover over the next 15 years.
I have not taken into account the ERC charges !!!
With your existing deal at the end of 5 years you would still owe £69,606 plus the £25,000 on the IO mortgage = £94,606
BUT I have not included the £50 a month saved which is £600 a year or £3000 over 5 years ( even more if you overpaid !! less compound interest !)
So you could save £10,000 before you take off the ERC charge !

adandem

dimbo61 wrote: »

Hi!
Your £82,000 repayment mortgage is costing you approx £587 a month
your £25,000 interest only mortgage is costing you approx £125 a month
!

Sorry, no our entire mortgage is £82k, this includes £25k interest only so £57k is repayment. Monthly payments are about £527 I think.
Sorry my OP wasn't too clear.

getmore4less

adandem wrote: »

Sorry, no our entire mortgage is £82k, this includes £25k interest only so £57k is repayment. Monthly payments are about £527 I think.
Sorry my OP wasn't too clear.

Insuficient information to work out if switching will be cheaper.
All cost and charges need to be shown as well as current and proposed deals.

adandem

getmore4less wrote: »

Insuficient information to work out if switching will be cheaper.
All cost and charges need to be shown as well as current and proposed deals.

I know it's worth switching, it's just whether we carry on with part/part mortgage or make it all repayment.

At the moment we pay £527 pcm and will owe £73,385 in 5 years.

If we have the 3.99% deal, all repayment we will pay £520 pcm and owe £70,441 in 5 years.

If we stick with part/part we will pay £452 pcm and owe around £75000 in 5 years. Of course we'd have the endowment cost too, £50 per month.

Now I'm totally confused

I don't know whether to go for the cheaper option and overpay, go all repayment and keep the endowment (for now) or scrap the endowment all together. I'll try and get all the info from NU on Monday.

getmore4less

it is a straight call, do you want to take the risk that the endowment will perform better than the mortgage interst rates which is no risk.

Forgetting the mortgage.

Would you buy this investment plan or prefer something else? ISA, increased pensions contributions to have a bigger lump sum.

If you would prefer something else ditch the plan.

Comparison you have to do like for like add the fees to the switched loan and pay the same each month.

£82000k 5y fix 5.99% £587pm after 5y £69,606.18
£88917k 5y fix 3.99% £587pm after 5y £61,605.84

Cost of switch must be less than £6917