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What to do with Mortgage?
kaneno1
Posts: 14 Forumite
I have finally decided to get my finances in order starting with my mortgage.
The current situation is as follows:
Mortage: £32,803 @ £207/month
Unsecured Loan: £8052 @ £83/month
Both of the above are under a Northern Rock Together mortgage (currently 7.58% variable)
With Profits Endowment -£53/month
Total £343/month
My mortgage is due to mature in 2020
A conservative valuation of my property is £72,000
The surrender value on my endowment is currently £9341 and in all likelihood is not going to pay off the required amount and I am extremely reluctant to pay additional contributions to it.
My plan is
1)[FONT="] [/FONT]Auction off my endowment and hopefully get a bit more than the surrender value
2) Use the proceeds to clear the unsecured element and a small part of the secured amount
3)Apply for an Egg tracker mortgage (currently 5.75%), with no arrangement fee and free valuation, for the balance
4) Arrange decreasing term assurance to cover the amount outstanding (joint cover with my partner who is not currently covered on the endowment)
If I maintain the current term of 12 years this would save £31/ month (£343 - £312). Based on the surrender value only. My debt will be reduced. The mortgage is guaranteed to be paid off. My partner will have life cover for the mortgage amount.
I am also toying with extending the mortgage term by seven years to nineteen years which would cost £238/month, saving £105 on the current outlay. I appreciate that extending the term of the loan would cost more in the longrun but the savings could be used to address other more expensive debts. Once other debts are under control the plan is to move house with a larger mortgage which would probably involve a longer term anyway to make payments affordable.
If anyone has any thoughts on the foregoing or can see any flaws in my thinking I would be grateful to hear them.
Thanks
PS, When I asked Northern Rock for a settlement figure on the unsecured loan the figure was the same as the outstanding amount. I was under the impression a rebate had to be offered for early settlement. Any thoughts?
The current situation is as follows:
Mortage: £32,803 @ £207/month
Unsecured Loan: £8052 @ £83/month
Both of the above are under a Northern Rock Together mortgage (currently 7.58% variable)
With Profits Endowment -£53/month
Total £343/month
My mortgage is due to mature in 2020
A conservative valuation of my property is £72,000
The surrender value on my endowment is currently £9341 and in all likelihood is not going to pay off the required amount and I am extremely reluctant to pay additional contributions to it.
My plan is
1)[FONT="] [/FONT]Auction off my endowment and hopefully get a bit more than the surrender value
2) Use the proceeds to clear the unsecured element and a small part of the secured amount
3)Apply for an Egg tracker mortgage (currently 5.75%), with no arrangement fee and free valuation, for the balance
4) Arrange decreasing term assurance to cover the amount outstanding (joint cover with my partner who is not currently covered on the endowment)
If I maintain the current term of 12 years this would save £31/ month (£343 - £312). Based on the surrender value only. My debt will be reduced. The mortgage is guaranteed to be paid off. My partner will have life cover for the mortgage amount.
I am also toying with extending the mortgage term by seven years to nineteen years which would cost £238/month, saving £105 on the current outlay. I appreciate that extending the term of the loan would cost more in the longrun but the savings could be used to address other more expensive debts. Once other debts are under control the plan is to move house with a larger mortgage which would probably involve a longer term anyway to make payments affordable.
If anyone has any thoughts on the foregoing or can see any flaws in my thinking I would be grateful to hear them.
Thanks
PS, When I asked Northern Rock for a settlement figure on the unsecured loan the figure was the same as the outstanding amount. I was under the impression a rebate had to be offered for early settlement. Any thoughts?
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