Can't decide if we're being silly?

pingufan

Situation is as follows

Mortgage with nationwide with around 6 years left. Currently on a 10 yr fix at 5.69%.

House is worth around 150k

76k on interest only, 6k on repayment, total redemption figure is 82k

2 endowment plans in place, one with standard life due to mature in around 4 years for 36k, expecting a shortfall around 12k on this. Current cash in value is 14.5k

Another endowment for 40k due to mature in 6 years, not such a large shortfall as it is split into 2 x 20k plans. Expected shortfall around 8k for both. Current cash in value is around 23k for both.

We have some work to do around the house and figured if I cashed in all the plans, paid off a large lump of the mortgage, and converted 50k to complete repayment over 10 years and it would still be around 100pm cheaper if I for instance was able to get the Yorkshire building society 5 yr fix at 2.44% (although that does have fees of £1345)

Am I missing something? I know I'm extending the term of the mortgage but was are still in our early 40's and at least it takes care of the shortfall and releases some funds for home improvements.

Or should I hang on and wait to see how the endowments do? Can't decide!!

comeandgo

Would there be a penalty to pay to Nationwide for early repayment? I imagine there are death benefits with the endowment policies, can you get cover if you need it at a reasonable cost? Before you cash in your policies I suggest you have a look at companies who buy them, they may give a better value to you.

hcb42

personally I would cash them in and reduce the mortgage and get on repayment, but that's my personal view only, not advice.

pingufan

Hi, yes there is an Eric with nationwide and this is included in the settlement figure of 82k that I got from Nationwide.

It's been a while since we remortgaged, we did it just before the 'crash' hence the 10 yr fix at 5.69:mad:

How much would unsecured loans have an impact on our new mortgage application? Between us we have about 20k all due to finish in the next 5 years. We have never missed a single payment ever, on anything and between us we earn around 48k but we do have 2 dependants.

Would the unsecured loans cause a problem in remortgaging?

silvercar

1. What is the interest rate on the unsecured? If it is high, I would consider combining it all onto the mortgage. I know that is converting unsecured to secured, but at the same time you are reducing your main mortgage balance. With no endowment premiums to pay and no separate loan repayments, you could overpay your mortgage and finish quicker.

2. Remember that the endowments come with life insurance, with dependents it is especially important to replace the life insurance if you are cashing in the endowments.

pingufan

The loans are between 6.2 and 8% interest rates, 15k (monthly payments are around £300 a month) will be gone in 3.5 years though so I'm reluctant to combine these into the mortgage back over 10 years and we can comfortably meet the repayments. I do understand what you mean about overpaying with the savings though.
I think I'll find a broker and talk through all the options with him

Yes, I understand we will have to get life insurance to cover us, thanks

amnblog

Yes, get some advice from a broker before you end up shooting yourself in the foot.