Mortgage Free in Three Yrs

Little_Mama

Hi TTBG,

Don't have an answer for you really but would it be an idea to hang onto the endowment as it does still provide you with life cover or have you got this provision covered elsewhere?

I personally don't like the idea of selling it as you are still the life assured so someone is waiting for you to pop off this mortal coil to get the only guaranteed payment on the plan and paid up never used to give agood return and used to get lower annual and terminal bonuses (assuming it's a conventional with profits policy you have).

It'd be worth seeing what the surrender value is and to do some sums. How long does it have left to run.

As for the S&S ISA, do you need the money at the mo? S&S ISAs are really more long term investments 10-15 yrs + to allow for market fluctuations. It all depends on how you feel the market may perform, I personally would be loathed to give away £3k and would be inclined to ride it out for the long term in the hope of a revival but then again who knows what the markets going to do.

No real answers there....hope my ramblings are of some use.

LM

Trying_to_be_good

Thanks Little Mama

I'm getting the figures for the endowment - I do have other life cover, and can also get replacement cover relatively cheaply as I'm still youngish (well, under 35!). It's spent the last couple of months going backwards, just like endowments used to.

I don't NEED the S&S ISA money at the moment, but do have my mortgage-free dream! I'd always seen it as a long-term investment and have hung on in there whilst many others have sold, but units are less than £1 now and some I paid over £2.60 for - I'd said my 'lowest acceptable price' was going to be £1, but now it's sunk that low, I'm at least thinking about holding on to it! It's with SG Asset Management, who I know are supposed to be quite good.

Little_Mama

Hi TTBG,

I suppose if I were in your position, if the surrender value was near to the o/s amount for your interest only part or would go a good way to reducing it then, in the quest for MFi3 then I'd surrender it. You lucky thing still being the right side of 35 for a life assurance quote! I couldn't believe how it shot up between 30 & 35, being on the wrong side of 35

If you've reached your 'lowest acceptable price' then it perhaps is a good idea to count your losses and run. We hung on once for a revival on some technology shares that OH had bought, the dropped below our 'lowest price' and we hung on waiting for them to surge up like Lazarus....instead the plummeted out of sight, off the stock market, never to be seen again.....and to think of the telling off I'd have got if I'd gone down the High Street with that money! :rotfl:

Good luck with your decisions, it's not easy second guessing but you need to do what's right for you at the moment and if that's your MFi3 dream, then go for it!

LM

Desperate_Housewife_2-2

Trying_to_be_good wrote: »

I'm thinking of simplifying my financial life, and am grateful for any views.

Currently, my mortgage is part repayment/part interest only (£40,000). I have an endowment forecasting £45,000 (original target £60,000) to cover the interest only element, but am looking at surrendering it/making it paid up/selling it and using the £150 per month contribution (it was only a 20-year endowment, hence the higher monthly contribution) to increase my monthly mortgage payment. I would plan to use the money from the endowment (if I sell or surrender it) to reduce the mortgage.

I also have S&S ISA in the technology sector - a lot of this dates back to 2001, but briefly it's worth £6,000 having cost £9,000 over the last 6 years. Is it time to cut my losses with this? I have been hoping it will at least recover to its cost.

Any thoughts?

Hi TTBG,

I was in a similar situation as regards the endowment and I cashed it in and got new life cover. The cost of life cover has come down over the years so you might be better off. I know I was. Maybe ask this question on one of the other threads? There are some knowledgable bods on this forum but I reckon for everyone who says cash it in there will be someone who says don't! Have a think how you want to prioritise thiings and then decide. Good luck!

Dithering_Dad

Desperate_Housewife wrote: »

Hi TTBG,

I was in a similar situation as regards the endowment and I cashed it in and got new life cover. The cost of life cover has come down over the years so you might be better off. I know I was. Maybe ask this question on one of the other threads? There are some knowledgable bods on this forum but I reckon for everyone who says cash it in there will be someone who says don't! Have a think how you want to prioritise thiings and then decide. Good luck!

I was in the same position, I found that I could arrange term life cover really cheaply for the amount my endowment was covering (£38k). I'm glad I cashed my endowment in, it paid £10.7k off my mortgage and really gave me a real incentive to blitz the rest of the Interest Only part of my mortgage - Just 9k left to go and it's all paid off, which will be 13 years early

I can't advise about the ISA, but I cashed mine in and put it onto the mortgage - it's not losing money anymore .

OverlandLandy wrote: »

Like Dithering Dad - I'm about to sit my motorbike test (again!) and I keep being drawn to-wards a new BMW R1200GS or an F850GS....help....please someone stop me......

lol, are you planning to go "the long way round" on your motorbike. Lovely machine though, you should give into the temptation as far as motorbikes are concerned - though your insurance will be huge if you get a 1200cc bike when you've just passed! I got a 600cc Kawasaki ZX6R as my first one and it was a bit of a shock. Bikes are great though, so go with your heart! (Saying that, I was going to get a Ducati 749 and in the end settled for the ZX9R - I'm such a MoneySaver! ).

Desperate_Housewife_2-2

Kaz2904 wrote: »

Look at my sig- I've paid off the windows- FINALLY!
I'm dead chuffed. It's been 4 years and we sold the flat a year after we had them fitted so we've been paying for these things with no benefit from them for so so long now!
Go us, Yay!

well done kaz!

gallygirl

TTBG - take some advice on tax position re cashing in endowment, there was something in this weeks's Sunday times (soz, have chucked it ) about losing tax free status depending on how long held, when cashed in etc.

Dithering_Dad

This taken from a financial website:

Do I face a tax bill if I sell my endowment policy?


If you are the original beneficial owner of the policy, that is to say if you were the person who took it out, unless you are a higher rate taxpayer there is generally no tax liability on the proceeds of the sale or auction of the policy. As you may be aware, income tax will already have been paid on any dividend income generated by the policy's equity investments. When you sell a policy that you originally took out and have paid premiums for at least ten years, or at least three quarters of the policy if sooner, you should have no income tax liability irrespective of your tax rate and nor will you be liable to Capital Gains Tax.

setmefree2

Kaz2904 wrote: »

Look at my sig- I've paid off the windows- FINALLY!
I'm dead chuffed. It's been 4 years and we sold the flat a year after we had them fitted so we've been paying for these things with no benefit from them for so so long now!
Go us, Yay!

Well done Kaz:T

cupid_s

Moneygoes2money wrote: »

I don't understand why you would be paying £30 tax per year. Let's say you have £3k in an ISA and decide to pay this money off your mortgage, why would you incur a tax charge of £30 per year? In this scenario, your savings balance would be nil so no interest and no tax to pay and your mortgage balance has been reduced by £3k. What are the interest rates on your mortgage and ISA?

Ah but by the time I start paying tax my savings balance will (hopefully) no longer be nil. The money I would otherwise have been paying off my mortgage at that time will now be accumulating in a savings account with tax being deducted and I would be paying around £30 in tax for my £3000.

My isa rates are various, my mortgage rate is 6.19. But what I do is open an ISA at the very end of each tax year rather than beginning, and start paying money off my mortgage early in the tax year so my money isn't tied up in an ISA before I need it to be.

I am lucky that I can put the maximum into ISAs and still overpay my mortgage significantly and should be mortgage free before I'm 28. And then I'll still have some nice tax free savings built up.

Not everyone can do both and if I knew I couldn't I would probably be concentrating on the mortgage rather than ISAs because as you rightly say this is MFi3, not 'save lots of money in ISAs in 3'