mortgage guidance for my parents!

marinboy

Hi everyone, my first post on here after lurking for a long time. Anyhow need some input.

Parents are comming to near retirement and have a small mortgage thats up for renewal in june.
they owe 19k
have about 5k in a endowment which they could cash in?
house is worth about 225k
they are looking at paying it all of in about 7 years

Now there might be some smarter ways of doing this rather than just a straight mortgage? any ideas on whats best?

Dan_Collins_2

Not sure about cashing in endowments, and I am sure few people would say do or dont. You have to think that in the last few days it could have lost value depending when and how it is managed.

What they could do is increase payments or reduce the term to get rid of the mortgage faster.

You may want to talk to the endowment provider and find out values before going for anything. I am sure Big D or Ed will give better advice on endowments.

marinboy

Thanks for the reply, i was wondering if i could do some fancy stuff like putting the balance on a 0% card or something as most mortgages only lend on over 25k?

homer_j_3

If you put any balance on credit card then you need to be sure the debt placed on card is affordable to pay before the 0% finishes as you have rightly said it will be difficult to remortgage. Economic climate may not see 0% be around and with balance transfer fees, its not really 0%

dunstonh

You also typically pay 3% when you put the money on a 0% credit card. So you arent saving anything and could end up paying more.

There are good endowments and bad endowments. Some good endowments still give red and amber shortfall warnings because of the limitations of the projection method. So, that is not enough to go on to make a decision. If the endowment is naff, then it is worth looking at the options. If the endowment is good then it would be silly to surrender.

firesidemaid

i'm sure their current provider would continue to lend them the money, albeit at the svr rate.

are they able to overpay as another poster has mentioned?

decide what the most they are able to pay is and then set the term to suit this - most mortgages also allow 10% overpayments too.

sarkin

Have you thought abouit converting the mortgage to repayment with current lender over 7 years and use the endowment as a savings plan.

sarkin

Your current lender will offer new rates, they may not be compaetativebut with such a small mortgage you will not notice the cost

EdInvestor

Post some info on the endowment for a view

Provider
Guaranteed sum assured
Declared bonuses
Surrender value
Monthly premium
Maturity date
Maturity forecasts
Interest rate payable on mortgage ( now) and SVR

marinboy

will do and will post back here when done

marinboy

Provider
1.Sun life financial of canada Guaranteed sum assured
2.not guaranteed may rise as well as fall
Declared bonuses
3.no declared bonuses that I can see
Surrender value
4.as of the end of january08 it was £5,730
Monthly premium
5.£14-46 per month
Maturity date
6.01/12/2016
Maturity forecasts
7.projected final amount on 4% per year £8,740
6% “ £10,300
8% “ £ 12,200
Interest rate payable on mortgage ( now) and SVR
8.6.0400%,we are on a dis’ of 1.30%
SVRi believe is 7.34%
With regard to the value of our funds on the suns webb site the value has fallen a bit since the end of January.