Mortgage/endowment dilemma.....advice sought

NDI

Hoping somebody out there can help? At the end of May we will reach the end of our 3 yr fix with the BOI. We have paid an interest rate of 5.65% and have only stuck with it for all this time as there is a hefty 3% redemption charge. At present we have a property worth approx £250K and the mortgage on that is approx £114K. It's a part interest/part repayment mortgage (60% int only/40% repayment) with 6 more years to run. The interest part is supposed to be covered by 2 endowments which cost us £90 per month in total, however, no surprise to anybody that they will fall drastically short of their target. Our joint income is approx £3000 net per month, however, we have substantial credit card and loan debts totalling approx £60K and are in a muddle as to what to do now. The debts are crippling us, yet we have a 'pot' of money tied up in our endowment policies. I'm sure there are things we could/should be doing but what? Should we cash in our endowments (they should yield approx £33K), pay off some of our debt and change the mortgage to a full repayment one at a lower interest rate than the present rate we pay? Should we keep the endowments and try to get another fix but perhaps jiggle the ratios of interest only/repayment and perhaps the term of the mortgage? Or should we let the mortgage revert to the lender's SVR in May (can't seem to find BOI's SVR but it must be lower than 5.65%?) pay off bigger chunks of debt with any 'spare' money we have from paying lower monthly payments and look at remortgaging further down the line when our debts are not quite so horrendous? We have never defaulted on any payments and have a good credit rating - just not sure whether lenders will rate us as a risk. Any help or advice would be much appreciated. Thanks in anticipation.

Thrugelmir

Your debts will be a barrier to remortgaging. Your credit rating will not be good. Regular payments carry no weight in that regard.

Personally I would cash in the endowments. As you'll be obtain a better return by repaying credit card debt and loans first.

Current SVR of BOI is 2.99%.

So I would drop onto the SVR and use the cash saving to repay your most expensive debt first.

To tackle the mortgage , reschedule the term if possible. Extend it to a manageable period on a repayment basis.

You need to tackle the root cause of your debts. So suggest you pay a visit to the DFW (Debt Free Wannabee) board. You'll get plenty of advice and support in getting yourselves sorted out.

Good luck.

NDI

Thanks for your advice, much appreciated. I think we will look into cashing in the endowments and pay off some of our more expensive debts.....thanks again.