maturing endowment & part payment to mortgage

rrold

I have an endowment maturing shortly but still have over two years of my mortgage to run. Would I be better investing/saving the endowment or put it toward part payment of mortgage?

opinions4u

What is the rate that you're paying on the mortgage?

Are there any redemption penalties if you pay off mortgage debt at the moment?

rrold

Sry for not replying earlier. My rate is 1.35% I believe I have a flexi mortgage which allows me to make overpayments. The mortgage has been extended because of the falling values of endowment returns in the past.
Hope this info useful.

opinions4u

I would put the endowment proceeds in to easy access accounts like www.if.com at 2.85% (2.28% net) and maximise my cash ISA allowance and leave it there until the rate on the mortgage exceeds the net rate on my savings account.

At the point the mortgage rate exceeds the net savings rate I would withdraw the savings and repay the debt.

On £10k endowment proceeds the IF suggestion above, assuming no changes in rates, will make you a profit of £93 a year.

Based on that value, and assuming you are happy enough to monitor the interest rates on savings and mortgage, you can make a decision as to whether you want to pay down your debt or not.