Remortgage - ditch endowment?

redboy_2

Hi all, I'd really appreciate any advice on what I should consider doing next!

I have an interest only mortgage with the Halifax for approx 54K + approx 1k "mortgage security fee"

This was taken out 5yrs ago along with a Winterthur Life endowment to pay off the debt after 25yrs.

My initial fixed rate has ended and after recent interest rises I am now on their uncompetetive svr.

My first port of call will be Halifax to see what they'll offer me but I am concerned about my endowment. This yrs review from Winterthur predicts paying off the debt at an investment growth of 6%pa or a 13k shortfall at 5%pa.

I don't like the element of risk (should never have taken it out to begin with) with the endowment. Should I stick with it now (5yrs in) or go to repayment for the remaining 20yrs. Do I have to keep paying in to endowment or can I just freeze it - I realise I won't get much if I sell it.

Basically I need to know what I should be considering. I imagine with a new lower rate if I switched to repayment and stopped my endowment my monthly outgoings would probably not change much? Does that sound feasible or would I have to increase the term of my mortgage to keep similar outgoing?

Also the "mortgage security fee"? Was that added because I only had a small deposit - can that be treated as normal debt now that the property is worth probably 100k+???

Sorry if this reads like the ramblings of a village idiot - I get tired and stressed just thinking about this stuff.

Many thanks for any replies.

Redboy

dunstonh

If you cash the endowment in before year 10 and you are a higher rate tax payer, you will get a tax bill.

Is it with profits or unit linked?

Taking it out 5 years ago means that you dont have to worry about the stockmarket crash in the same way someone who took theirs out 10-15 years ago. Indeed, you have would benefited from the crash.

If after 5 years you are on track at 6% that is very very good news as 5 years usually shows a shortfall as the charges for the plan come out in first 12-24 months.

MarkyMarkD

Also the "mortgage security fee"?  Was that added because I only had a small deposit - can that be treated as normal debt now that the property is worth probably 100k+???

Yes, it will just be part of the regular loan when you remortgage and you shouldn't have to pay one again if your equity has now grown along with house prices.