Worried About Losing My Home

Merlot

Hi,

Are your endowments on target to pay off your mortgage, if not, take advice you could sell them and then take Martins advice and reclaim on your missold endowment, I did and I got £6000 back. (plus a large amount of the endowment policy money back too, then you could take out a repayment mortgage).

Here's the link to Martins article.

http://www.moneysavingexpert.com/reclaim/endowments-miss-sold.

firesidemaid

just notice that you have 2 endowments for your mortgage, but you are also paying out £600 a month for your mortgage.

is that interest-only? if so that rate seems very high. if it is capital/interest then do you really need to keep the endowments?

good luck x

PANDORA

Thanks for the comments. The endowments AREN'T on target to pay morgage. We claimed re.missold endowments about 3-4 years ago, got around £2,400 for each.

£40,000 of mortgage is endowment and £40,000 interest only - just over £600 per month (though just come down due to interest rate cut).

My plan in my head was to downsize to a smaller house nearer the time of retirement, pay off the mortgage and use the equity to buy house (I plan NOT to add to the mortgage over the next 14 years!!! Wellllllll that was the plan!) and the endowments would be a nice cash sum to help in retirement. If I ever get the extension off the ground............then rent my mum would pay towards living with us could be used to overpay mortgage hopefully (now that I've read about it on this site). Can't plan anything financially with OH as he is a gambler, self-emloyed, cash-in-hand (worst scenario!) though thankfully (better late than never) i cancelled joint account, refused to co-sign any more loans and thought that was me on the road to self-reliance. But didn't reckon on him getting credit cards...though at least he now can't get any debt, so that's got to be a blessing! Just didn't reckon on house being at risk. Should have changed the mortgage into my name years ago but hindsights a great thing.

Anyway, I'm so greatful I found this sight, because I know now that given enough time, reading as much as I can and asking enough questions, I just might be able to rely on myself financially at some point and that's definitely worth working towards.

Merlot

PANDORA wrote: »

I don't have all the details to hand but here is a rough SOA

Mortgage £80,000 £600
Standard Life Endowment 53 (for mortgage)- Take advice and maybe cash these in
Prudential Endowment 55 (for mortgage)- Take advice and cash these in
Councill Tax 150 due to increase Apr - Spread over 12 months instead of 10
Friends Provident 12.34 for me - whats this for?
Scottish Power 71 - about to increase it to £111 wow - are you in arrears?
Gas CH maintenance 23.06 - get rid
House Insurance 8.63
Nat Ins contributions (OH) 8.40
Northern Rock loan 89.99 -my name only £4319 May 06
1st National (suite) 29.89 - clear in May 08
Car Insurance 25.73
Oxfam 6.00 - Gotta go -Sorry
TV Licence 12.00 quarterly - surely this is monthly?
Bank Loan 241.00 my name - £12,000
Halifax Credit Card 130.00 my name - £5,945 12.94%
Lloyds TSB Cr Card 20.00 my name- £900 think about 12%

Credit Union 150.00 Balance £600 Shares £2000 - You have shares? If so, I would take advice and sell them

Outgoings 1713

OH CC payments 74
Total 1787

My Wage 1,000
OH Pension 320
OH wage 800

Total income 2,120 (food, petrol, car tax, not included)

This isn't an exact SOA but will refine it along the line.

I have added a few comments above.

Merlot.x.

PANDORA

Merlot wrote: »

I have added a few comments above.

Merlot.x.

endowments - will look at these.
council Tax - Month 11 i use for Building Insurance payment. Month 12 for cash reserve for unforseen expenses.
Friends prov. -Mortg broker advised this for the £40,000 not covered by endowments.
Scottish Power - no arrears. Currently balance £100 - payment of £71 due end of ths month. Letter received saying they are raising payment for projected dual power usage for coming year!!
Gas CH maintenance -keeping this as I I've had them out quite a lot over the past 5 years and boiler is coming to the end of it's life, so had quite a few parts replaced. don't want to be in situation where I can't afford repairs.
Oxfam - will cancel this. Oooooooooo the guilt!
TV Licence - sorry your right, it's monthly.
Credit union - the 'shares' are savings and equate to the loan you can apply for e.g. 3x savings. Can't be withdrawn until there is no loan balance. Use Cr Un for Christmas, large purchases etc.

PANDORA

Have re-checked endowments........these cover the first £40,000 of mortgage. Payment to Friends Provident was life cover for the second £40,000.

firesidemaid

so you will be paying interest only on the whole £80,000, which at 6% would be £400 a month. so are you paying loads for your endowment? or are you just on a really high interest rate?

i'm no expert but you would still be paying £600 a month for a capital reapyment mortgage at 6%. so could you convert and cash in the endowments to free cash?

PANDORA

Hi sazzcat

If i'm reading it right........... the 2 endowments cover £20,000 each of the mortgage(40,000) Endowments cost £108.75 per month. The re-mortgage of £40,000 is repayment mortgage. So yes, paying interest on the whole 80,000. Present monthly payment £604.00 If endowments had worked as planned, they should have paid of 40,000 at the end of the term and the other 40,000 would have been paid off as this is on repayment basis. Does that make sense? I'm not on a really high interst rate from what I can see. The remortgage was done in 2005 and the interest rate was 5.84% (obviously rate increases since then has upped that though not sure what it is at the minute). After June this year, interest rate will go up to 6.50%.

Just a bit worried about cashing in the endowments, as these would obviously pay off the first £40,000 in the event of one of us dying?

silvercar

Your post does make sense, you have 40k repayment and 40k interest only. You have endowments that are estimated to pay out £40k and a life policy for £40k cover. What doesn't make sense is that your life policy and endowment are costing you the same. The life policy should be much cheaper as there is no investment element to it. Depending on your health and age, it may be cheaper to get life cover for £80k and switch to a totally repayment mortgage and cash in the endowment policy.

Can you check that the endowments are only paying out £40k life insurance? If they were set up to cover a £60k mortgage then that will be the amount of life cover they offer, even if the payout forecasts are now lower So you could have more life cover than you know.

If you are paying £604 a month either you have a high interest rate (over 7.5%) or you have a short term mortgage (less than 12 years). I don't know your age, but one option is to extend your mortgage to reduce your payments. A 20 year, 80k mortgage, spilt repayment and interest only would cost £515 a month at 6.5%.

PANDORA

Thanks silvercar

think there's a bit of confusion here! Life cover & endowments aren't costing the same. Endowment payments(including critial illness cover) are £108 for £40,000. Life insurance cover -for me only-for the 'repayment' £40,000 is £12 per month (Friends provident). OH has health problems and broker had difficulty getting cover for him at the time of re-mortgage..........so he's quids in if I go first!! There's no justice in this world! Yes, it is a short term mortgage as we re-mortgaged 3 years ago (age 51)...... term was for 14 years. Think maybe my only option is to try and overpay on the mortgage once I get finances into order?