What to with all this money!

dougsclan

I have two endowment policies which mature soon. One is this may and worth around 28K the second will mature in 2014 and will be worth around 11k. Both are with Prudential (formerly Scottish amicable). They are designed to pay off part of my mortgage. The remainder of my mortgage is a straight repayment.

The mortagages however have end dates are not for another 14 years or so. I was surprised at this but Lloyds made the endowmwnt elements the same dates as the repayment for some reason.

additionaly, I signed up to a deal where I would have to pay a penalty if I paid off the endowment elelment before 2012. It was a tracker deal which is running at 0.49 above base rate. Therefore I believe it to be around 1% at the moment. In 2012 I will have to get a new deal

In May I would have normally paid of a sum of my mortgage but I would have to pay the £900 penalty, so I wont be doing that.

My question is two parts though. When I get the 28k in May where should i put it?.... I would like to get the best rate and lock it up for two years (2012). Any suggestions? I dont want to take many risks as this is my mortgage.

and secondly, if interest rates are so low (lower than savings) should I even consider paying my mortgage off as I would get more from my savings?

Best regards

Doug

opinions4u

My question is two parts though. When I get the 28k in May where should i put it?.... I would like to get the best rate and lock it up for two years (2012). Any suggestions? I dont want to take many risks as this is my mortgage.

Ask nearer the time. At the moment I'd suggest something like Bank of Scotland 2 year fix at 4.15% or the AA easy access account paying 3.15%. It will all be different in May though.

and secondly, if interest rates are so low (lower than savings) should I even consider paying my mortgage off as I would get more from my savings?

I'd save and earn a higher rate of interest than I'm being charged on my mortgage.

A couple of things to consider:

- don't forget the tax bill on your savings, especially if you are a higher rate taxpayer. (3% gross is 2.4% net and down to 1.8% for a higher rate taxpayer).

- if you fix for 2 years and BofE rises above your fixed rate you could be out of pocket. Therefore, an easy access account may be more appropriate than a fix that ties you in.