Using endownment to pay mortgage

carriedawaywithitall

I am nearing the end of my mortgage of £49k in April and will get £20k from an endownment around the same time.

Is it worth putting the £20k into a high rate savings account for a few years, I know about the interest rates being very low, but sureley they will go up! Or do I pay the 20k off the mortgage? My mortgage is very manageable £340 per month and I know that it would be less if/when I pay the 20k.

Confused as to what to do so any advice would be greatly received.

carriedawaywithitall

My rate of interest at the moment is 4.3% which is due to be revised/renewed in April, which is on a fixed term. My mortgage has another 20 years to go.

Mikeyorks

carriedawaywithitall wrote: »

My rate of interest at the moment is 4.3%

You won't get 4.3% net (5.4% gross) in a Savings account anywhere at the moment. So the financial benefit is to pay £20k off the Mortgage.
But you can trade that off by continuing to either then overpay the Mortgage or - pay the reduced rate - and put the excess of the £340 into savings?

Assuming the endowment isn't legally tied into the Mortgage .... in which case you have to put the proceeds there.

carriedawaywithitall

no, the endowment isnt tied into the mortgage as such. I took it out over 25 years ago on a house I brought for £16K.

Thrugelmir

carriedawaywithitall wrote: »

Confused as to what to do so any advice would be greatly received.

Seeing your signature. Do you have other unsecured debt owing?

carriedawaywithitall

I have a car loan for £1,500, credit card £500, Orange bill (from 16 year old daughter) £450, sofa £700, halifax overdraft £2,500. I did wonder if I paid all these off with some of the endownment then put rest to the mortgage and then the money I am paying to all these each month put in an savings account???!!

[Deleted User]

Hi,

well you could square off all outstanding debts, that'll leave you about 14.5k.

See what new mortgage arrangements are going to be, higher/lower, fixed/variable.

If happy with new mortgage, then put money in savings, maybe cash isa's.

If mortgage going up a whack, you could put 10k towards it to reduce monthly payments, and keep 4.5K in savings to help keep you from the debt route again.

The money saved on mortgage could be put a monthly savings account, some give higher interest if saving regularly.

getmore4less

carriedawaywithitall wrote: »

My rate of interest at the moment is 4.3% which is due to be revised/renewed in April, which is on a fixed term. My mortgage has another 20 years to go.

Whats the rate in April.

I have a car loan for £1,500, credit card £500, Orange bill (from 16 year old daughter) £450, sofa £700, halifax overdraft £2,500

It looks like you have some budgeting issues, living ahead of the income.
I would sort those out before deciding what to do with the money.

carriedawaywithitall

getmore4less wrote: »

It looks like you have some budgeting issues, living ahead of the income.

I have since Sept been budgeting and have actually sticked to it, and I personally think I am doing very well under my circumstances.
The mobile phone bill was a shock and something that I could have done without, but it has been a lesson to myself and my daughter, who is paying me a bit each month till paid off. I did have 3 jobs up when I took out my car loan, realising that having 3 kids and elderly mother to look after (I am on my own) wasnt doing my health or wellbeing any good. In July I quit two and stayed with the job that had the most prospects etc, which I thoroughly enjoy.
I will probably (at the moment as things change) pay off my debts with the endowment and put the rest to the mortgage.
It seems its all swings and roundabouts.

[Deleted User]

Hi,

the good thing is that you are dealing with your debt, and seem to have it under control.

Good luck.