Fixed Rate ending, Part Endowment maturing, £165K lump sum and inheritance available, house move...

sfc_vince

Just wondering what others would do in this position…

 My fixed rate mortgage with RBS, 2.19%, runs out on 30th Sept this year.  I have £120K outstanding with 9 years left, made up of 3 sub accounts. Two of those are capital and interest for 18K and £2K respectively, the other is for £99K, interest only, backed by 3 endowment policies which were originally targeted to return £140K, but part of the mortgage was converted to repayment a while ago, hence the sub account splits.  One of those matures in February 2021, the other 2 in 2024, the sum of all 3 should clear the £99K sub account based on the low projections quoted by around £17K. The one that matures in Feb 2021 is an Aviva Low Cost Homebuyers Plan, investing in their Aviva LCHP With-Profits Sub Funds with a current surrender value of £65K as of today (target was £58K, so pleased with that).

 We are looking to move house, we’ll get around £440K for ours and are looking to buy around the £700K mark.  We’re not on the market yet, so it could be that we don’t move until well into 2021 (Stamp Duty Holiday may be an influencing factor).  I am in the fortunate position of also having £125K in the bank from a recent investment (no outstanding tax implications on that) plus I have an inheritance of £40K coming in the next few weeks.  To complete the picture, I’m early 50s, married with 2 teenage kids (one planning on going to Uni Sept 2021) in a job that is “secure” in the same sense that any job is secure at the moment (the business I’m in is busy, no signs of any lay offs) and no outstanding high interest loans (credit cards or car).

 So I’m just trying to weigh up the options with juggling those things round.  I want to redo a fix rate when my current one expires, but as I understand it, I’d have to pay off any lump sum before I do that, or it’s limited to 10% (in general).  I’ll make sure it’s portable for if and when we do move.  The interest only part of my mortgage will obviously need to be paid off (at some point) so I could take off an amount to match the £65K I expect to get in February 2021 from that maturing policy, or weigh up how much the other 2 endowments look like realising in 4 years time and only reduce the interest only part now by the difference (i.e. if they look like realising £52K in 2024, pay off £48k now and put the other £17k from the February 2021 policy towards more capital to the new house) – possibly risky if they fail to deliver, I guess.

 The other decision is whether to use the rest of the spare cash to pay off the existing mortgage in September when the current fix expires, but knowing that I’m going to need to apply for another one very soon to fund a house move, or use it as more capital against the new house.

 I appreciate this is a fortunate position to be in, in this day and age, but would be interested in others points of view.

dimbo61

You have money in the bank earning £???
At the same time your paying 2.19% on your current mortgage which runs out in September.
I would clear the mortgage with the cash in the bank.
Keep paying the endowments and start looking for the new home.
It will take 8/10/12 weeks to find and buy a new home plus sell your current home.
Look at Offset mortgages as you can pay the endowments, inheritance and any other investments you may have mature in the next few years into the Offset account.
You can also use money in offset account to support your kids through Uni.

getmore4less

Situation seems you will still be borrowing after the move so work back from that situation(mortgage term payment) then restructure your current finances to fit that.

If kids are leaving you don't need a bigger house how much better is this new one. 

At 50 you don't want too many more expensive moves, could be looking at early retirement.