Do I Have to Pay Mortgage Off Now?

Jellybaby

Hi, would appreciate some advice please before I contact our mortgage lender (Santander).

Background - my husband sadly passed away a few weeks ago. Our mortgage is in joint names and we only have two years left before it's due to end - approx £29,800, down by overpaying the last few years from £35,000. It is an endowment mortgage and we currently only pay £43 per month. Our two endowment policies have paid out in full (Standard Life have been absolutely fab!).

My question is can I bank the £35k for the next couple of years or will I have to pay the mortgage in full now?

Sorry if this is a rather basic question but my head's all over the place at the moment. I should also mention I plan to seek financial advice before doing anything.

Thrugelmir

Sorry to hear of your loss.

My advice would be to clear your mortgage and relieve yourself of the burden.

originalmiscellany

My condolences to you also. I imagine as long as there are no fees for paying early is to clear your mortgage and then one less thing to worry about, at what must naturally be a difficult time.
As you realise Jellybaby, this forum is full of good financial advice and I am sure you'd get a lot of good clear comments and support if you have any other issues that you may need help on.

Jellybaby

Thanks for the quick replies. Lots to think about.

TrickyDicky101

What rate of interest are you being charged on your mortgage at the moment? I take it it is on an interest only basis? While the economically best answer might be to invest the cash if able to get a higher rate of return (post tax) than you are currently paying on your mortgage, I personally would do as Thrugelmir advises.

magpiecottage

Sorry to hear your news but I presume you have been overpaying to clear an anticipated shortfall on the endowments which will not now have occurred.

That means it will repay the mortgage and leave you with about £5K over.

You will need to find the money in a couple of years anyway and so it would be unwise to put the funds into anything speculative as there would be too little time to recover and you would almost certainly not achieve as much as you would pay if it is simply put on deposit.

There could also be an effect on entitlement to means tested benefits if invested. This is unlikely to be the case if the policies were taken out with the specific intent of clearing the mortgage and they are promptly used for that purpose. £5K would be disregarded for means tested benefits.

(I am making a big assumption that you have no other resources here but please excuse me if that is incorrect).

hcb42

You dont have to pay it off now, but if you want to transfer it to a repayment (or keep overpaying), and then pay it off in a similar timeframe, then the payments would be significant

dimbo61

As magpiecottage has already stated the endowments were taken out to pay off the mortgage at the end of the term or the death or anyone named on the endowment .
If you have £35K in the bank it will effect your entitlement to benefits so unless there is ERC if you pay off the mortgage early I would clear the mortgage
Good Luck