looking for a mortgage endowment?

olivia84

hi there,

i am looking for an endowment for my mortgage loan. i know these are very risky these days which means i am having trouble finding anyone who offers them.

a bit of background: we took out our mortgage in 2004 - house price was £62,500 - mortgage given £77,000!!! - (thanks to northern rock's wonderful 125% mortgages!) 2 lots of fixed rate deals later and the associated fees and charges and we owe around £86,000. credit rating now v. bad so not in a postition to get a good fixed rate deal anywhere else, we have been on the standard variable rate for over 2 years now. i am now paying interest only on my mortgage due to high outgoings (which should come down considerably next year)

also, what we owe on our mortgage is probably what the house is worth for the moment.

we are 33 and 35 so obviously don't want to be paying interest only for very much longer and would also like to reduce my term from the 30 years it is just now to maybe 20.

what i was thinking was to invest in some sort of endowment or policy of some sort just now - putting away something - anything - towards my mortgage. i am not disciplined enough to put it aside for savings. something that may (and i stress may) make some money so in a couple of years time, come off interest only and have a little something to put towards the mortgage, then reduce my term and go back onto repayment.

i have considered ISAs and such but there isn't much return on them at the moment - i know that there isn't much return anywhere at the moment but i would be able to get access to it in an ISA which i don't want!

i am not too worried about interest rate rises at the moment as i have an insurance policy to cover me for anything above 6.5%.

this really would only be a short term endowment; 2 years or so. i'm assuming endowment companies invested people's money and the returns would be slightly better than ISAs??

any advice would be greatly appriciated.

many thanks

TrickyDicky101

For only two years' worth of investment you won't be able to beat simply overpaying on your mortgage each month. I am somewhat perplexed why you would imagine an endowment return would beat an ISA (in general terms)? Endowments are usually long term products for the simple reason that premiums to the company providing the endowment (or their distributing agent) are front loaded in their favour - it is only later premiums that actually get invested to earn a return for you.

olivia84

thanks for that - guess i don't know as much about endowments as i need to! i had an endowment on a flat years ago (when they were all the rage!) and for around £40 per month for around 3 years we received £1900 when we cashed it in (we went onto repayment then) i'm just starting to worry about my mortgage balance and term and looking for some sort of solution that i could afford just now. i wouldn't be able to afford the monthly payments going back on repayment and reducing the term just now - i would only be able to do it in a couple of years and maybe afford £40 odd quid a month just now to put towards something. i'll look into overpaying just now but may look again at an ISA.

magpiecottage

From what you say in your posts, I think relying on an investment of any kind to repay your mortgage is likely to be unsuitable for you.

It will be better to keep overpaying.

dunstonh

this really would only be a short term endowment; 2 years or so. i'm assuming endowment companies invested people's money and the returns would be slightly better than ISAs??

Endowments had to have a minimum term of 10 years for tax purposes. So, ignoring the fact that 2 years investing is a bad idea, the product type couldnt do it anyway. Pay any extra into the mortgage or use savings accounts.