Should I pay off some of my mortgage? 26 July 2007 at 7:01AM in Mortgage-free wannabe 2 replies 782 views

Moon~Shadow

I have a mortgage which is linked to 2 endowment policies, 1 matures next year £25,000, the other in 2014.

My outstanding mortgage is about £34,000 and I'm wondering whether paying off a lump sum will save us money over the next few years?

I have ISA's to back up any shortfall and currently have around £28,000+ in savings.

I am also starting a new job which is gives me extra money each month to save on top of the £600 we already put aside.

Is it worth paying off eg: £10,000 to reduce the overall amount long term? I have spoken to the BS and as it is an Interest Only Endowment they didn't think I would see the benefit - or is it because they will lose the interest they are making from me :rolleyes:

Any advice or experiences welcomed. Thanks

Welshlassie

I'd have a look at one of the mortgage calculators (see the calculators thread, I like the Egg one). This will give you some idea of how much interest you would actually save. It would depend on whether your interest is calculated yearly, monthly or even daily, how much you may save. Also how quickly you would be able to build your savings back up if you were to use them. If you pay off a lump sum you will more than likely save money over the next few years, but check the conditions of the mortgage as you may have a penalty fee is you pay off say more than 10% each year.

Vickie_3

Hi,we also have an endowment.In 99 we changed our morgage to a repayment one for 10 years.We have paid it off & the bank have done nothing but put obstacles in our way to try & stop us paying it.I would strongly reccomend you change yours all the banks are interested in is making money.We have kept the Endowment running has a savings plan.We
will have a huge loss wish I had known what I know now.Vickie