More "Need to be" than "Wannabee"

graham47

Mods,
Please move if you feel this should be elsewhere!

OK, I'd welcome any thoughts/opinions.
I took early retirement about 6 years ago. My pension plus a part-time job more than covered my outgoings. I've now stopped working altogether and need to increase my income or reduce outgoings to compensate.
My mortgage has about 6 years to go at 6.99% current, no other debts or CCards and 5 years away from collecting state pension.
Conventional wisdom says to use some of my savings to pay off the mortgage, however I remember once being advised "don't be too quick to give up your capial".
I then started to consider investing savings in an account giving easy access monthly interest and using this interest to fund the mortgage.
I calculate I need to get 5.9% before tax to cover what I need.
OK I will lose 1.09% pa of my savings for 6 years but after that I'll still have more capital than if I used it to pay the mortgage off.

Also, I have 2 endowments (not mortgage linked) maturing this year:-
June 08 - £16000
Oct 08 - £8000
these together would also pay off mortgage or (if also invested) mean I only need 4.4% return before tax !

What would you do ?

Graham

Little_Mama

Hi Graham47,

I suppose it depends on your attitude to risk to an extent.

If you use the endowments to pay off your mortgage later in the year then you will have saved yourself that monthly outgoing and also be safe in the knowledge that, no matter what happens, you own your own four walls.

You'd also have saved yourself a chunk of interest and could reinvest the money saved by not making mortgage payments.

As I say, this is the safe route. Perhaps someone will come along with something more daring and probably a lot more financially savvy.

Good luck with the decision.

LM