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Cash in endowment rather than borrow on mortgage
bargainbarmy
Posts: 295 Forumite
Hi I wonder if anybody can offer any advice. I want to borrow about £15k for a new kitchen but rather than borrow more on my mortgage and pay a higher rate than the 2.5% BMR that I am currently on I was wondering if I could cash in one of my mortgage endowments and convert the same amount from the interest only part of my mortgage into a repayment.
The particular endowment I wanted to cash in has never performed particularly well. It was originally supposed to pay off £32k of my mortgage in 2015. I received compensation for it and paid off £15k of the mortgage in 2002. The remainder is guaranteed to pay out at least £17k in 2015 and is worth about £16k now. I was just wondering whether I am allowed to cash that in and convert the same amount into a repayment mortgage but pay it over say another 10 years even though that part of my mortgage was expected to be paid off in 2015. If i was going o borrow the extra on my mortgage I would pay it off over 10 years. Doing it this way would mean I wouldn't have to pay any arrangement fees, higher fixed rates etc. and it would be less hassle - no paperwork, payslips etc.
I apologise if I have not explained this very well. I just want to know if I have to tell my Mortgage lender I want to do this and will they allow it? Many thanks.
The particular endowment I wanted to cash in has never performed particularly well. It was originally supposed to pay off £32k of my mortgage in 2015. I received compensation for it and paid off £15k of the mortgage in 2002. The remainder is guaranteed to pay out at least £17k in 2015 and is worth about £16k now. I was just wondering whether I am allowed to cash that in and convert the same amount into a repayment mortgage but pay it over say another 10 years even though that part of my mortgage was expected to be paid off in 2015. If i was going o borrow the extra on my mortgage I would pay it off over 10 years. Doing it this way would mean I wouldn't have to pay any arrangement fees, higher fixed rates etc. and it would be less hassle - no paperwork, payslips etc.
I apologise if I have not explained this very well. I just want to know if I have to tell my Mortgage lender I want to do this and will they allow it? Many thanks.
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Comments
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Yes, you need to talk to your lender about it.
1. They will agree to switch you to repayment. There may be a small fee.
2. They may not agree to extend your term.
Your endowment may have some sort of mortgage promise. Standard Life and Aviva policies for example. Think carefully before killing it.0 -
No offence meant but do you really need to spend £15,000 to get a new kitchen? Bargain - no, barmy - Yes!
Cheers.0 -
I think you should talk to your lender about it and find some solid solution for it.0
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AllenMansurian wrote: »I think you should talk to your lender about it and find some solid solution for it.
No you don't. You think we should all buy some shoddy tat from you.
Spam reported.0
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