Endowment Matured

falcon46

Hi all, First time post here.

Recently I have had one of my many Endowment policies mature which I duly received a chq for £4500. My questions is should I use it for what it was intended for and pay off against my £70k mort.

Or would I be better to put it in an ISA and let it gain value and use it to pay off my mortage when that runs out in 8years.

cheers

maninthestreet

It's never going to pay off £70K after investing it for 8 years, even if you put in a tax-free cash ISA (£3500 this tax year, £1000 next year). What interest rate are you currently paying on your mortgage?

falcon46

hi maninthestreet

I realise what you say about it won't pay off 70k. As I said in original post this is one of many (5) endowments I have. Although all together I will have a 10k shortfall. I am just trying to make up that shortfall by investing the proceeds rather than pay off in one swoop.

Do you agree ??

My interest at the moment is just 0.5% below the base rate.

dimbo61

which base rate is that BOE therefore 4.5 % or 0.5% below the base rate
or SVR of your lender ?
if you are paying 4.5% then invest in an ISA barclays paying 6.5% (£3600)
keep a careful eye on the rate you are getting from ISA,s and compare with the rate you are paying on your mortage, if the savings rate is less than your mortgage rate then pay off some of the mortgage but carry on paying the same amount of mortgage each month and you may be able to make up the
£10,000 shortfall GOOD LUCK

EdInvestor

You need also to factor in tax - paying off the mortgage is tax free, whereas cash savings, unless in an ISA, are taxed.

falcon46

Yes the cash is in an ISA. so no need to worry about TAX

TREVORCOLMAN

Anyone who wants to save should always use their Cash ISA Allowance first - up to £3600 for this tax year.

If, say, you want to pay mortgage off in 4 years (for example) then you may think of putting it in a 4 year fixed rate ISA.

That way you are less tempted to touch it and you know upfront the rate you will get and can work out what it will be worth in 4 years - or whatever term you decide.

TC

TREVORCOLMAN

You need to speak to your mortgage provider to see if its better to pay some off your morgage instead.