To Pay Off, Or Not To Pay Off (that is the question)

JollyJackTar

If it's too good to be true, then it normally it is !


We have an endowment policy that we originally took out against an interest only mortgage - many moons ago. Since then we have changed to a normal repayment mortgage - but have kept paying into the endowment policy with a view to enjoying the lump sum at maturity. However, the cash-in value of the endowment mortgage is NOW equal to the outstanding balance on the mortgage.


The mortgage and the endowment policy have 7 years left to run. There are no penalties for early redemption of the mortgage.


It seems like a 'no brainer' - use the cash in value to pay-off (END!!) the mortgage.


I appeal to you clever people out there - is there a catch? (...and what is it?)

Gloomendoom

How much will the mortgage cost you over the next 7 years? How much extra will the endowment be worth at full term?

A simplistic comparison but it should give you some idea of whether paying off early is worth considering.

edinburgher

To me, the 'no brainer' is whatever gives you the best return on your money

• What's your mortgage interest rate?
• What is the growth/rate of return on your endowment?
• Could the money be better used elsewhere to generate income, or reduce your current expenses (for example, different investments, or home repairs/improvements)?

If you're 'mortgage neutral' already, you should be in no rush to make your mind up, take the time you need :beer: