Need help with interest only mortgage...

devdas212005

Hi,

I have an interest only mortgage of £36,000 which will finish in Feb 2012. I also have endowment which will mature at the same time but will only provide about £16,000. As you can see there is a big shortfall there. I complained about the mis-sold endowment and received a compensation of around more then £10,000. The result is I will be £10,000 short when mortgage and endowment ends. With the recession, I don't think the endowment will go up in value.

I was thinking of changing a mortgage to repayment only and pay the £10k I received as compensation as a lump sum so the mortgage is 26k. Even if I cash in the endowment, I will still need to pay another 10k which is like £360+ a month.
Is there any way round it or will I have to re-mortgage the 10k for another 10 years? I was hoping the mortgage ends by 2012 which is my retirement age.

All help and advice is appreciated.

Thanks

opinions4u

devdas212005 wrote: »

I have an interest only mortgage of £36,000 which will finish in Feb 2012. I also have endowment which will mature at the same time but will only provide about £16,000. As you can see there is a big shortfall there. I complained about the mis-sold endowment and received a compensation of around more then £10,000.

Does this compensation put you back in the position you would have been in had you taken a repayment mortgage? Or have you accepted an offer from the seller that is possibly for a lower amount?

The result is I will be £10,000 short when mortgage and endowment ends. With the recession, I don't think the endowment will go up in value.

It may or may not go up from its current position. One would hope that the strong performance of the markets over the last 11 months would continue. Who knows?

I was thinking of changing a mortgage to repayment only and pay the £10k I received as compensation as a lump sum so the mortgage is 26k. Even if I cash in the endowment, I will still need to pay another 10k which is like £360+ a month.

Please post details of your current mortgage rate and clarify if £16k is your current surrender value or projected maturity value as this isn't clear.

As you say, one of your options would be to surrender the policy, reduce your mortgage with the proceeds and the compensation and have a £10k mortgage.

£10k over 3 years at 5% should cost about £300 a month on a repayment mortgage. Is this affordable when you consider what you currenly pay for mortgage and endowment combined?

Does your mortgage allow you to overpay? Find out!