Which part of our Part and Part to pay off?

butterflymum

My head is buzzing from reviewing figures etc, so comments from someone with a clear head would be welcome.


Thought/suggestions please:

Remaining Mortgage : £23,995.06 (£16,500 Endow £7495.06 Repay)
Remaining Term: 8 years 2 months
Current Rate: SVR 7.64% (although trying to switch to lower)


£9,100 to put into Mortgage A/C (this amount is not presently invested and earning any interest). We do each have ISA, etc but do not want to touch any funds in same.

Do we:

Ask that the £9100 be used as £7495.06 to clear Repayment amount in full and balance of £1604.94 to reducing Endowment amount partly.

or

Ask that it be all used to partly reduce Endowment only, leaving us still with a part and part .

Whichever, the payment will be offset immediately. We realise our monthly mortgage payments will then reduce but, having checked with lender, if we continue to pay the same monthly amount as present, the overpayments will not be off-set until year end, so we will put the difference into a savings a/c instead and pay off lump sums now and again (which will be off set immediately).

apk1

You should pay off the endowment part, you can then carry on reducing your mortgage down by making the monthly payments on the repayment part, you will save far more interest than you will earn by in interest on your savings.

butterflymum

This was my initial thought, but then I talked myself round in circles and convinced myself I was missing something and that that we should clear the repayment part first (and therefore associated monthly Capital & Interest payments) leaving us only with the Endowment and so monthly Interest Only payments.

butterflymum

Can I check, are you saying it is better to reduce the capital on the Endowment part first because the overall monies knocked off the Repayment Capital at year end from each monthly capital payment will be greater than the total additional cost each month to keep paying Interest on reduced Endowment amount and Interest & Capital on Repayment (or have I totally confused myself now - which is quite possible the way my head has been buzzing)?

Does anyone else think differently or is this a concensus of opinion?

butterflymum

Anyone? The mortgage lender now has our money and we should have decided today if it was to come off the Endowment part or ther Repayment part.

apk1

I think the answer to your question is yes, just trying to work out the wording ! But yes the capital will reduce more over the year because you will still be making capital repayments.