Really stuck - cash in or keep with it

bigscooby

My 5 year fixed rate mortgage is up for renewal next week. I was previously paying 3.79 % and i can now get a deal at 1.7 %. I pay interest only and owe 58k.

In the meantime my £90 per month and £70 endowments with standard life has shot up in recent months and the surrender value is 29k and 15k so 44k total as of today. I have been paying into the larger one for 19 years and smaller one 14 years so 6 years to go on both.. I have a spare 14 grand in a savings account which i am getting virtually no interest on.

Should i go for option A or B

A) Cash in endowments and use my 14 k savings and be mortgage free at 42. Would feel like i would of finally got the ball and chain off my leg. I would lose my life and critical illness cover. The MRP on my last statement said an amount between £100 and £150.

Pay 14 k of my interest only portion leaving 44k and possibly switching half to repayment over remaining 6 years. Keep my endowment to maturity.

I am really tempted for option A to get rid of this thing once and for all. Any advice much appreciated

Typhoon2000

I would go with c) Get the 1.7% deal and over pay every month ( don't switch to repayment).
Keep savings for a rainy day, let the endowments mature and keep your life and critical illness.

BLOW_FLY

FWIW It's a gamble whatever you do but personally I'd go option A if the endowments with the savings cleared, in full, the capital part of your IO mortgage (no absolute guarantee on endowment in the future). Weren't the endowments the repayment vehicle anyway.....?

With the spare cash you can save, take out out new life insurance and critical illness policies and be mortgage free :j:j:j

BF

bigscooby

Yes the endowment was to pay off the mortgage but every year i had red and yellow letters to say of a shortfall. The original amount it was to pay was 72,000 but i managed to chip away at that and get it down to 58,000 so endowment would cover it. I am thinking of cashing in and going option A and taking out new life insurance etc.

bigscooby

Anybody else have an opinion. Have to decide by next week when my current deal expireses

AnotherJoe

Another vote for Typhoons option C.

Note re posts 3&4, that new life insurance and CI will be MUCH more expensive to buy now than you paid 14 or 19 years ago. Keep it while you can.

barbedhook

Option A every time be mortgage free do you really need critical I'll insurance once your mortgage is paid off? Just take out a life insurance policy at your age it shouldn't be that expensive save a bit every month and enjoy yourself you've worked hard for what you've got so enjoy it thousands of people would like to be in your shoes and be mortgage free

FIRSTTIMER

I would pay it all off and be mortgage free - if you need the money in the future - just put a mortgage on ur house again - the ltv rate would be great and result in a peanut amount of interest being paid

bigscooby

Thanks for the feedback much appreciated.

bigscooby

I also changed job a year ago and i get free life insurance with new job

bigscooby

There was an Option D that i Forgot to mention i went to see a financial advisor and his advice was.

Do not pay off the mortgage but borrow more. Interests rate are so low so borrow as much as you can and cash in endowments. Leave yourself 7000 and give it all to him to invest in a portfolia. He got me to fill in a risk survey so out of 7 i came in at a 2. I dont like risks. He then proceeded to show me that a 2 invested with him for the previous 5 years has netted a 40 percent return. The fee was 3.75 percent of whatever you invest and then additional 1 percent fees for 2 reviews per year for duration of time that you have your money invested.

I did not like Option D