endownment payment of 30,000 best options reducing mortgage 17 September 2010 at 2:39PM edited 17 September 2010 at 2:44PM in Mortgage-free wannabe 5 replies 1.1K views

maz1964

hiya all

currently have 100,000 mortgage have about 10 years left, currently paying only interest only at 353.00 monthly but endownment from sun life for 30,000 now matured - its on a fixed rate of 4.24 for a further 2 years and a bit.

i was wanting to see my best options,

1. Hubby wishes to just pay it off the mortgage decrease our mortgage.

2.Also then see what the mortgage would be at a repayment level,

3. However, i would like to see how we can ensure we use the money to the best advantage ie Pay off the 30,000 as the full endownment maturity payment, do we put the mortgage to repayment and then we can overpay 10% and that overpayment would it help in decreasing the years- as the mortgage is then 70,000

4 or are there better options than anyone can think of pls


cheers, appreciate any guidance MAZ:)

dimbo61

You are on a fixed rate mortgage ?
So if you pay a big lump off the mortgage you will get hit with big ERC ( early repayment charges)
Read the terms of the mortgage and if allowed then pay off 10% straight away.
Have you both got cash ISA,s for this year £5100 each
Consider regular savers £250/£500 a month each
You can also ask about changing mortgage to repayment and see what you are happy paying each month

dimbo61

IF ? you were allowed to pay the £30K off the mortgage and then change the mortgage from Interest only to repayment the cost would be £716 a month over 10 years at 4.24%

maz1964

hello dimbo60

huge thanks for your quick reply,

ive checked with them and since its a endownment payment maturity then i will not be hit with the early payment fee, and i can only pay a lump sum of 500.00 minimum and only for 10% yearly as part of my mortgage terms - thus now thinking is it better i start paying on a repayment amount as you have given plus any extra 500.00 as i can during the remaining term, at least this would reduce years and interest being charged - have i got that right?

dont have any isa's, as never really had any spare cash, but doing my budget now to see what i can save on to consider a savings plan of sorts, but of course my thinking to pay into the mortgage as the interest rate is 4.24 is higher than any savings account - thinking that is better to do for now?
your thoughts pls

thank you for your time much appreciated

have a fun day laters maz:beer:

dimbo61

Sounds like a good plan so overpay what you can and put the rest into savings while drip feeding the overpayments each month

maz1964

hiya again thanks

i will pay the maturity amount off thus reducing to the 70,000 change to repayment and then over pay as much as i can upto the 10% each year, well if i can overpay the 7,000 this year that would be a good start,,

best get on with my budget see you later, maz