Ways to pay off interest only mortgage

jowest312

Hi

Since I took out my mortgage about 6 years ago, I have life insurance policy that will pay a lump sum when either myself or my husband dies, this will be used to pay of the mortgae but I was thinking is there another option where I can still be insured but if we are still around in say 25 years time the money paid in will hopefully matured and we can then pay the mortgage off that way?

Thanks in advance

Jo

Malmo

Do you have the capacity and ability to overpay the mortgage each month and start paying down the capital sum owed?

jowest312

Hi

Thanks for replying, I do try to over pay each month but this will no way be enough to cover the mortgage in 19 years time though we do have equity in the property. I just thought that if i'm already paying £27.00 a month life insurance that will give me nothing at the end unless one of us dies then for roughly the same amout of money I could take a chance with an endowment policy. Hope that makes sense.

Thanks

Joanne

joedenise

£27 a month into an endowment policy won't give you anywhere near enough money at the end to pay off your mortgage. We've been paying £110 a month into an endowment policy for over 20 years and it probably won't cover all the mortgage when it becomes due.

We've been overpaying the mortgage each month and also have money in savings which means we'll be paying the mortgage off on time.

Denise

dimbo61

Forget endowments as very few companies now offer them.
Use "whatsthecost" to work out how much your mortgage would cost each month if repayment instead of Interest only.
Now either you pay this extra each month now or face having to sell your home when you retire and move into rented/ housing association accommodation.

jowest312

OK thank you for your help but I don't think I would be able to pay much more over than I'm alreasy paying but I suppose I will have to try and find a way.

Thanks Jo

Jon_B_2

Well yeah, I guess you'll have to otherwise you will have to hand your keys back to the bank?!

jowest312

Well I have about 45,000 equity and 20 years to sort it out so hopefully not

silvercar

Time is on your side, as income increases you should be able to afford to make extra payments each month. Potential bonuses/ lottery wins/ inheritance etc could all help.

If nothing else, house price inflation should mean that in 25 years time your property will be worth a lot more than your mortgage, giving you the option of selling up and buying something smaller or in a cheaper area.

It is good that you are thinking of this now, so are aware of the risks.

I have friends who bought 25 years ago, have had their children who have now flown the nest, so are selling and the equity left after clearing the mortgage will buy a decent flat in the area.

Mortgage_Mark_2

jowest312 wrote: »

Well I have about 45,000 equity and 20 years to sort it out so hopefully not

The amount of equity is irrelevant when considering ways to pay off the mortgage.

TrickyDicky101

How much do you actually owe on the mortgage and what rate are you being charged for it?

Would it be viable to remortgage to a cheaper (albeit repayment) deal?

What are your incomes?