Endowment shortfall...options??

gazshaz213

Our mortgage is ending and our endowments are falling about £15,000 short. We could fund this with some share holdings that we have but would mean selling about 30% of what we have. Does anyone have any advice on whether it is best to do this and be debt free or arrange for another repayment mortgage to cover the shortfall or maybe take out a personal loan?? Thank you for looking.

Thrugelmir

Will the shares provide a better return than borrowing the money?

Annisele

Let me get my crystal ball out...

More seriously, we can't give you advice on these forums - against the rules. We can give opinions and comments only.

Even if we were allowed to give advice, it would be hard to do so on the basis of the information you've posted.

For example, for all I know you're 64, you retire next month, and your only income is going to be your state pension. In those circumstances, I'd probably say you should cash in your shareholdings.

On the other hand, you might be 40, in a secure and well paid job, with a speculative attitude to risk, and very sure that the return you'd get on your shares would be higher than the interest rate you'd pay on your mortgage - in which case I might say keep the shares and keep the mortgage interest only for as long as you can.

Have you asked your current lender what options they'll offer if you can't repay the full amount at the end of the term? For a mortgage as low as £15k it might not be worth switching lender (anything with a fee is going to swallow up potential interest rate savings pretty fast).

I'd suspect the terms you'd get on a personal loan wouldn't be as good as the terms you'd get from your current lender, but you'll need to check with them.

noodle

Will £15,000 worth of shares make a good enough return to cover the cost of a £15,000 mortgage? Who knows? I presume your shares are in an ISA, so you don't need to take tax into account?

One idea is to put it the other way... if things were reversed would you consider taking out a £15,000 loan to fund an addition to your share portfolio? If not, then there's your answer.

As another posted said, your age and future earnings are a factor, as is your appetite for risk.

Also, consider your motivations for buying the shares in the first place.. did you have a plan for if/when you'd sell? If so, does this situation fit in with that plan? If it does, then stick to your plan. I think it's better to stick to your original plan than to try and second-guess 'the market', especially in these curious times!