Help - Endowments don't work!

Amphitrite

Hi

Would like some opinions please - and sorry if this post is rather long!

We currently have 3 endowments, all of which are showing shortfalls. The reason we have 3 is not because we haven’t learnt our lesson– the second was taken out when we remortgaged to help finances when OH left work to become a full-time, mature student. The third was after we’d sold our first house and moved to another but had to remortgage once more to get us out of the brown stuff when we found ourselves struggling with a mortgage interest rate of 16.25% (!) back in the early 90’s.

The first endowment of £34k is due to mature in Sept 2011 (showing a shortfall of £12.5k), the second for £19k has another 4 years to run (shortfall projected of £5.5k). The third has 5 more years and is projecting a shortfall of £4.6k. :mad:

Up until recently we’ve not been in a position to save any money, but now that our mortgage interest rate has reduced substantially (currently 1.9% with Northern Rock) my question is this. Would we be better off putting the savings we’re now making on this reduced mortgage payment into our "reserve pot" of the mortgage (it’s a Flexible Reserve mortgage) – or taking out an ISA each – we’re contemplating Intell Finance Cash ISA of 2.75%.

We’re both basic rate taxpayers.
I’m due to collect my state pension early next year – though will still need to carry on working (have lost out on company pensions!)
We don’t intend staying in this house forever – we had it on the market 18 months ago but ended up taking it off when the housing market stalled.

Any helpful advice would be much appreciated.
Thanks