help shortfall on intrest only mortage

racheluk_2

Hi my problem is there is a shortfall on my endowment policy and my mortgage is interest only.

I somehow have to find 23,000 by 2016 Do I increase my payments to the endowment or do I use a savings account, or pay extra to my mortgage company and reduce the interest.

I really do not know what to do for the best

Many thanks for any advice in advance

Rachel

opinions4u

racheluk wrote: »

Hi my problem is there is a shortfall on my endowment policy and my mortgage is interest only.

You are not alone.

I somehow have to find 23,000 by 2016 Do I increase my payments to the endowment or do I use a savings account, or pay extra to my mortgage company and reduce the interest.

All are options:
- endowment ... this could be the best return/it could be the worst return, but to me it feels like throwing good money after bad
- savings ... only worthwhile if the net rate is higher than you mortgage rate.
- mortgage ... the preferred option for me, as long as you don't get penalised for overpaying.
- other savings plan ... e.g. stocks and shares ISA (but this has an element of risk to capital when you are most likely to be seeking certainty).

£250-£300 a month extra is a lot to find. Lenders may be prepared to extend terms etc in this situation.

There are other options around the endowment policy too.
- Make it "paid-up" and use the saved premiums to reduce the mortgage debt.
- Surrender it, pay the lump sum off the mortgage now and find out exactly what month payments are needed to repay the mortgage.

Post the following and EdIvestor / Dunstonh will be along to give some views too:

Provider
Guaranteed minimum at maturity
Surrender value
Monthly premium
Maturity date
Maturity forecasts
Mortgage interest rate

racheluk_2

Hi
Thanks for the information

The other problem COULD be that I am state assisted and if I increase my mortgage payments I'm not sure how I stand with them.

The other is the endowment was awarded to me by the court I know it was miss sold but have been told that as my EX-husband signed it there is nothing I can do. I pay the premiums on it

I'm not covered only he is, as I multiple sclerosis I am on DLA and IS etc

Rachel

cattie

If you increase your mortgage payment from your present income, then that wouldn't be a problem as far as DWP are concerned.

They would only be concerned if somebody was paying up a mortgage from capital in order to ensure they qualify or continue to qualify from state means tested benefits. This they would consider as deprivation of capital, which doesn't apply to you in this case.

racheluk_2

Hi Cattie thanks for your comments

Think thats what I will do then just pay extra on the mortgage I know I cann not pay the full amount an extra £350.00 but will hopefully be able pay an extra 100.00 I know its along way from what I need to do but a least it will still be less at the end to find and will have to cross that bridge when I come to it. Very frustrating my whole mortgage is only £44,500 I know I'm lucky in that respect and its worth about 170,000

Any way thanks again am a lot clearer in my mind now

Rachel