Changing circumstances - decisions to be made..

dfarry

Hi all, I'd appreciate some advice please mainly in regards to my mortgage and endowment but my changing circumstances are perhaps relevant too (apologies if this is unnecessarily waffly)...

In the last year I have:-

• Been made redundant
• Got around £8K redundancy money remaining.
• Spent 8 months on a fixed term contract that basically just paid the bills
• Stopped paying into my personal/stakeholder pension until the money situation is clearer.
• Last month started a new permanent job, paying a bit more money - less than the job I was made redundant from and the commuting costs are around £40 per week!
• Realised that my home/family need more space and am therefore looking at moving (out of London and closer to my work) and taking on a significantly larger mortgage in the process.

Financially, we have a few thousand in savings plus the redundancy money. My partner looks after the children but is hoping to take on low paid though flexible/convenient part time job somewhere close to home.

My new salary is £39K pa but off that I'd say £2800 will be used currently to commute (including vehicle running costs). Also I need to restart my pension, or join the stakeholder one at my new job so that will reduce any monthly income further. My partner has not paid into a pension since finishing work in 1998, and thats another consideration for us.

I am 35, my partner is 33 and we have two kids... aged 7 and 5

Mortgages/Endowments:

In 1994 we brought our current home with a £51300 interest only mortgage from the Leeds, with it came a Norwich Union With Profits Endowment. This included life and critical illness cover too. There is about £40K left on the mortgage now (due to additional borrowing and home improvements)

After fearing the endowment might not pay off the mortgage I remortgaged to a repayment mortgage - Woolwich Open Plan Offset (a flexible current account style account). I kept the remaining term the same and the mortgage is due to end in 2019 and the endowment is due to muture at the same time. Originally I thought that I would not surrender the endowment and any money it did eventually make might be a nice top up to our future pensions.

Over the past few years NU have advised me that the endowment was unlikely to reach it's forecast, I believe the last forecast was for around at around £40K I have tried to claim for mis-selling compensation because the endowment was heavily sold as "it will give you potability and a Nest Egg lump sum" but Norwich Union refused to pay us anything further.

This policy cost me £81 a month (I never increased it despite NU advising me to do so) but I am not sure whether it is money well spent now... the options I guess are:-

• Continue as I am and pay the premiums till maturity
• Stop the payments and let the policy mature with lower contributions but at least penalty free
• Cash it in and use the funds now
• Sell the policy and use the funds now.

To sell our property now I think we would get around £200K, after paying off the Woolwich mortgage that would leave us with around £160K to use for the new home. The new homes I have been looking at are around the £275K mark but they are much closer to my current work place and therefore travelling costs will be at least halved (gaining us about £100 per month).

To buy the property we would have all the usual legal, stamp duty, estate agents, searchs costs to pay but I am hoping the £8K redundancy money would cover that.

Really the big uncertainty for me remains the endowment... by extending the term of the new mortgage to 25 years I think a £115K mortgage would still be within our budget but perhaps not whilst the endowment is being paid. Clearly any extra cash at the moment would be useful but I only want to surrender or sell the policy if the longer term potential of it is looking poor....

Any views, suggests or advice would be gratefully received.

dfarry

Gulp I hadn't quite bargained on stamp duty being so high...

£275K = £8250 :mad:
£251K = £7530 :mad:
£250K = £2500 :mad:

Legalised Daylight Robbery!! :mad: