paying off mortgage using savings and endowment

teddygrowler

Hi,

I need advice. I have been overpaying on my £32500 mortgage for a few years now due to being missold on the endowment and being told the endowments wouldn't cover the mortgage at full term. I currently have just over £20000 left to pay and my mortgage is due to finish in 3 years and 7 months. I have £10000 in savings and if i cash in my two endowments (also due up in 3 yrs and 7 mnths) the early redemption value comes to around £15000. I could therefore pay off my mortage in full and no longer have to pay monthly mortgage £107 and £50 endowment. I know we are always told never to cash in the endowments early because we wouldn't get the final bonus but to be honest, the missold endowments are going to be well below the amount once "promised" anyway. I really would like to pay off the mortgage now as my son is due to go to uni and we could then put the monthly money towards helping him. Has anyone got any thoughts on this? :cool:

wymondham

I can't comment on if it's best for you, but I did exactly what you're planning and never regretted it!!

opinions4u

The key could well be establishing if the endowents contain any element of mortgage guarantee.

If they do, you need to establish this value with the company concerned.

If they don't, I'd follow the plan!

DVardysShadow

teddygrowler wrote: »

I know we are always told never to cash in the endowments early because we wouldn't get the final bonus but to be honest, the missold endowments are going to be well below the amount once "promised" anyway.

It matters not a jot that it will not perform as well as you hoped. What really matters is whether the return on your savings and the endowment including any final bonus is better or worse than the return the lender makes from you on the loan.

dunstonh

I know we are always told never to cash in the endowments early because we wouldn't get the final bonus

That is not the reason you were told not to cash them in early. Final bonsues accrue on a daily basis (annual with older ones).

The "you must not surrender" message came about from tied agents who were not authorised to recommend cancellation or surrender of their plans. They were encouraged to tell people to not surrender. IFAs can tell you to surrender but tied agents nearly always cant. If the reasons are justiable then you should surrender.

the missold endowments

you say they were mis-sold. Does the mis-sale redress effect them in anyway?

Has anyone got any thoughts on this?

Its a fairly straightforward cost and benefit analysis of the different options to see which comes out best. You have to consider things like guarantees and penalties and costs and loss of life assurance.

jamesd

It's likely to be better to gradually draw on the savings. Ignoring interest that £10,000 could pay £160 a month to your son for more than five years without you having to compromise your position on the endowments.

If the endowments perform in any way linked to the stock markets they are likely to have a higher value in three to four years than today. More important for this question, they are likely to gain more than the 4% or so that you're paying o the mortgage.

One interesting way to help children at university is to buy a property for them to live in that is also rented out to other students, who end up covering the cost of the mortgage.