should i pay off my mortgage

markbsac

simple one this but what should i do

i have an outstanding mortgage of £36,000 my endowments today are worth £26,000 my fixed rate finishes at the end of this year so i will then have no penalties to pay,but will go onto variable rate.

i have 4 years left on my mortgage

should i just cash in the £26,000 endowments now add £10,000 to it and pay it off or let the endowments run for the next 4 years and see what they make ?

i really dont know the best option !

wymondham

Experts will be along shortly with this, but as you're so close to the endowments maturing then it might be wise to wait and see?? (not sure if there are implications of being so close??)

Having said that, I would personally cash it all in and be free, but I'm not an expert, but I did do exactly this, although my endowments had longer to run than yours. A lot of this depends on how much emergency funds you have etc as you don't want to leave yourself skint, but with no mortgage!

Another option is to switch to an offset or current account mortgage and cash in the endowments. This would get rid of your mortgage, but also allow you access to all the funds if you need them (i did this to great effect!)

itsnever2lateisit?

Have you thought about selling the endowment policy? I dont know what the market is like now, but they used to fetch more than cashing in

chappers

All depends how your endowments are performing, you are close to any terminal bonus you may get so maybe better to hold fire.
It's all about weighing up how much the endowments are going to be worth at maturity compared, to the payments you still have to make on them and your mortgage(assume you will go onto SVR after the end of the year) for the next 4 years, against the cashed in endowment.

markbsac

i have tried two companys that buy endowments they can not offer me anymore than they are worth if i cash them in with standard life and norwich union......i wont leave myself skint and i could be looking at a very large redunacy payment over 40k obviously if i get made redundant which i dont want i would clear it so my house is then mine...........but basically with 4 years laft to run my bonus's may be quite large...but it would need to make 10k in the next 4 years to pay it off.....i also have 3k from a misold endowment so in effect i need to find approx 7k to finish it.

thanks for the advice so far

mark

allan673

i would pay off the mortgage - thats my opinion.

markbsac

hi again are there any experts out there that would like to make a comment on my post......thanks for all of your posts so far....mark:T

chappers

allan673 wrote: »

i would pay off the mortgage - thats my opinion.

depends upon your redundancy situation and if you will actually save money if you do, we all like the sound of being mortgage free, but it is not always the most beneficial way to go.
say you have a mortgage at a rate of 5% then you would be better saving a load of cash you have at 6% rather than paying off the mortgage

allan673

yes but you would get rid of the interest being accrued each day/month.
as probably half of the monthly payment is interest!
if you paid off the mortgage you would save thousands of pounds in interest that the bank is charging you.

use a mortgage calculator to work out what you would pay in interest over the remaining term of the mortgage, then subtract the redemption fee from it, and it will make your mind up. for me its a no brainer............

green1970

Are they unit linked or with profits endowment policies? If U/L, I'd certainly cash them in and pay off your mortgage now.

markbsac

both are with profits i think while asking companys if they would like to buy them they would only buy the one with the norwich union they would not touch the one with standard life as i think this is linked to stock markets ect