Is it worth paying off mortgage with 4 yrs to run?

SophieJB

Our mortgage has about 4 years to run and is for £50,000. Our house is worth much more obviously. We have three endowments, all of which are underperforming but we have been saving hard for a few years, even going without holidays just to make sure we can make up the shortfall.

We are now in a position to clear the mortgage and would carry on paying the endowments for the four years as they are also life insurance policies.

My question to you experts is:

Do you think we should clear all of the mortgage?
Should we clear part of the mortgage?
Would there be a 'penalty' to pay, even with only four years to run?
Would it be better to invest the cash which is in the BS at the moment or would the interest earned be less than the interest we would be paying?

Thanks

maninthestreet

Presumably this is an interest only mortgage, since there are three endowments linked to it?
At 5.25% p.a, the interest in £50,000 over 4 years is £10,500. You would save this amount of money if you were to pay off the mortage completely today.
You are unlikely to get a return of 5.25% after tax by putting the £50,000 in a bank or building society savings account.
You will need to give us more details on the three endowment policies to advise further - how much was each endowment originally for, what are the monthly payments, projected shortfall, surrender value and maturity date
of each endowment?