swapping endownment for repayment mortgage.

kathryn_1

I received a red alert letter from Norwich Union today stating that when my endownment policies mature in two years time they will not be enough to pay off my mortgage, which I knew anyway. Luckily I don't have a large mortgage and the worst case scenario is that i will be about £7,000 short.

Obviously I know that I need to speak to a financial advisor about this but I was wondering if someone can give me some advice. Would I be better off swapping my endownment mortgage for a repayment mortgage for the remaining two years. I would also like to keep on paying my endownment policies as well as they are only about £30 a month so I know I can afford to do this. In my head I have worked out this is probably the best thing to but i am not sure if I can have a repayment mortgage and endownments running at the same time in order to pay off my mortgage.

opinions4u

kathryn_1 wrote: »

I received a red alert letter from Norwich Union today stating that when my endownment policies mature in two years time they will not be enough to pay off my mortgage, which I knew anyway. Luckily I don't have a large mortgage and the worst case scenario is that i will be about £7,000 short.

Ouch. Remember, they can do better or worse than the projections on the letter though.

Would I be better off swapping my endownment mortgage for a repayment mortgage for the remaining two years.

This would give you a higher degree of certainty, but will cost you more each month.

I would also like to keep on paying my endownment policies as well as they are only about £30 a month so I know I can afford to do this.

Even after paying higher mortgage payments?

In my head I have worked out this is probably the best thing to but i am not sure if I can have a repayment mortgage and endownments running at the same time in order to pay off my mortgage.

You can.

Some lenders may charge a fee if you transfer from endowment to repayment (or part repayment).

You may be better (if your mortgage allows) overpaying the mortgage by around £300 a month in order to clear the projected shortfall, and not doing anything official.

mothershipton

agree with all the above but would suggest you speak to your lender and get some illustrations on how much swapping to a repayment mortgage is. 2 years isnt long to save up £7k so i think you would be better switching some if not all for a repayment

good luck