Endowment/remortgage advice please.

houseiseverything

Hello. I will try to give as many details as possible, hope you can help, really I am looking for a second opinion on whether to cash in an endowment.

Currently have an interest only mortgage with Santander, with a Friends Life With Profits Fund Endowment. House purchased 1999. Mortgage is £125k, house worth £350k.

Fixed rate 2.99%with Santander ends in March, they will put us on their SVR- our payments will go up from £313.32 to £499 a month.

Endowment is £249.21 a month. Currently on a green light. Guaranteed maturity value £7589.00. Cash in value £47542.31.(value of units £40197.68, terminal bonus £6359.79, reorganization bonus £984.84) Assumed growth rate 4% projected maturity value £122000.00. At 8% it would be £184000.00.

I have an offer from NatWest to go onto a repayment mortgage. 18 years £125k on 3.59% 5 year fixed. £786 per month. I'm worried that this would be very tight if I carry on paying the endowment as well. I am self employed.

I could cash in the endowment and have a £77k mortgage, paying £487 a month over 18 years, and hopefully overpaying by £200 a month. I am very tempted by this, as my partner has just lost his business and has been left with a lot of debt as he guaranteed the company overdraft. Grrr. Thus the mortgage will be in my sole name as his credit rating is totally trashed. Maybe he should have thought of this before he guarenteed the loans...

The other option is to stay with Santander and pay the SVR, as they will only reduce the rate if we go on a repayment, and they have been rather sketchy about what they would actually reduce the rate to!

Anyway, I was told that we have an excellent endowment and I really shouldn't let go of it. However, as my financial future looks a bit unsure I don't know what to do. I could probably afford a part repayment, but I guess I would have to go to a broker for that?

I know that no-one can tell what endowments will do in the future, but I just wondered if someone could give me their opinion on whether it looks like a good one as I was told.

Thanks, and sorry for the novel.

kingstreet

Switch to part endowment, part repayment instead of all repayment, then the pressure on the endowment is lessened without you having to spend as much.

Get a better rate too. That five year fix you're quoting is expensive. You should be getting closer to 3% on that loan to value.

houseiseverything

Thanks so much. I think I've messed up because they went through the application process with me, so credit checked me. will this make a difference to being credit checked by others?

Should I go to a broker to try to get a part repayment do you think? Stupid question- is this expensive? We are really low on funds at the moment due to partners business going into liquidation. Thanks again

Dave_Ham

You appear to have loads going on in your life at the moment. It would be worth paying for qualified advice, as because there are many variables to manage.

Second Kings. point; there will be better rates out there.

All the best

kingstreet

What made you pick that NatWest offer in the first place?

A broker would be able to find you a better deal than the one you mention and if you don't feel comfortable doing so, will take care of the process through to completion. He will also advise on the remaining lenders which will offer "part & part."

Fee-charging brokers may agree to payment on completion, so you only pay when the deal goes through.

houseiseverything

I think I picked the NatWest offer because I bank with them, and thought I had a better chance of getting the mortgage as my partner has a terrible credit rating. I realise now that was rubbish!

I am going to email NatWest and say I don't want it, the advisor said that would be OK so I am hoping that it will be. Then I need to find a broker... I asked NatWest about part repayment and when they said they wouldn't do that I should have walked away.


Thanks for the advice- I'm assuming the endowment does look ok?