do I have to use my endowment to pay off mortgage

pennypincher61

I have an offset mortgage and am overpaying by about £300 a month. As interest rates are low I thought it might be a good time to borrow some extra money and have an extension on the house.
My existing lender YBS have given me some figures today, and I have compared this with First Direct.

First Direct advisor was fab and really knew his stuff but their arrangement fees are high and as my mortgage is relatively small the amount saved with the lower interest rate wouldnt be as much as the arrangement fees.

I assume I would need solicitor etc to remortgage too if I change lenders??

Anyway, I have an endowmnent due to mature in August. Can I put this in my savings to offset the mortgage?

Or do I have to use it to pay off some of the mortgage?

If I dont have to use it to pay mortgage off would I be better off waiting til August and using the money for the extension rather than borrowing more?

silvercar

I assume I would need solicitor etc to remortgage too if I change lenders??

Most lenders offer remortgage deals with legal fees paid or at a low rate using their appointed solicitors.

Anyway, I have an endowmnent due to mature in August. Can I put this in my savings to offset the mortgage?

Should be able to. Unless your endowment was assigned to the lender 25 years ago. (Though chances are that you are not with the original lender and/or the lender no longer requires policies to be assigned.)

If I dont have to use it to pay mortgage off would I be better off waiting til August and using the money for the extension rather than borrowing more?

Depends on the figures. You will save on any arrangement fees being charged. If you borrow the extra now you will be paying interest on it until August when you can reduce the mortgage by the payout. So its the costs of borrowing from now til August plus any other fees.

EdInvestor

pennypincher61 wrote: »

Anyway, I have an endowmnent due to mature in August. If I dont have to use it to pay mortgage off would I be better off waiting til August and using the money for the extension rather than borrowing more?

Post some details about it.You may be better to surrender it now.

Provider
Guaranteed sum assured
Declared bonuses
Surrender value
Monthly premium
Maturity forecasts
Interest rate payable on mortgage

koexelek

As long as the endowment is not assigned to the lender, you can do what you like with it

pennypincher61

thanks everyone for comments so far ..

edinvestor :

Provider Standard Life
Guaranteed sum assured originally £25000,
Declared bonuses
Surrender value
Monthly premium £68.28
Maturity forecasts £18000
Interest rate payable on mortgage I have various bits, some at 1.25% some at 3.75%, with 6 years 9 months left to run and a Legal & General endowment due around that same time sum asured £15,000

EdInvestor

Get the surrender values. The SL one certainly will reduce in value between now and maturity and the L&G one is very likely too.I assume they are both with profits endowments?

pennypincher61

omg! why will it go down????

pennypincher61

I've just spoken to Std life, it is assigned to the building society. They gave me a quotation based as of value today and its even less than I thought!
usual thing, they cant advise me..... does anyone take any responsibility for anything these days....!!

pennypincher61

Just spoke to Yorkshire head office and they are going to write to Standard Life to say they have no further interst in it, then I can do what i like with it

errrrrm, gobsmacked, didnt expect it to be that simple!


so, now what? Do I surrender it early, sell it or wait for maturity?

mikeup

pennypincher61 wrote: »

omg! why will it go down????

...Just got my statement from Standard life - and my "current value" has DECREASED by ~10%!!!

nothing in the blurb to explain / apologise...

I am throwing good money after bad??

Still has 3 years to run - should I cash in now - before it goes down more??

Newbird

Hi PP61, just to let you know we were in a similar position to you a while back, and yes you can offset your payout, (now you've cleared that up) we did and the offsetting has worked well for us as IRs came down, so was best place for it, as we didn't chose to pay off part of our extended mortgage, to keep cash flow flexible for extra works on the house etc.

Just check carefully the surrender values, I would hate to see you lose out after all the hard work of paying into the damn thing. We just escaped in time when ours matured before the bloomin recession hit.

Good luck!