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    • fairylights100
    • By fairylights100 24th May 19, 10:14 AM
    • 2Posts
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    fairylights100
    Endowment mortgage/selling house query
    • #1
    • 24th May 19, 10:14 AM
    Endowment mortgage/selling house query 24th May 19 at 10:14 AM
    Hi, I wonder if someone could give me some advice please. We have an endowment mortgage due to end in 3 years. We are considering selling our home before it ends as were worried the endowment wont cover it. Not sure what figures are helpful, but these are some approximate details:

    Mortgage 90k
    Endowment projection value 60k (Prudential - amber warning)
    Current house value 300k

    Am I right in saying that if we use the proceeds of the sale to pay off the mortgage wed still have a majority of the sale figure to rent temporarily/use as a deposit for another purchase? Would we also still have the endowment if we cashed it in for additional funds, or let it run its term and keep as an investment? Everything is paid up to date and there is no arrears. I appreciate there may be some additional fees incurred, but just wonder what our best financial options are?

    We dont have a financial adviser and have let this drift a bit, and Id appreciate some opinions before speaking to an adviser as I have a bit of a mistrust of them (we werent well informed about endowment mortgages when we took it out) and Im not very good at understanding financial things.

    Thank you in advance and apologies if the questions are stupid.
Page 1
    • Exodi
    • By Exodi 24th May 19, 10:25 AM
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    Exodi
    • #2
    • 24th May 19, 10:25 AM
    • #2
    • 24th May 19, 10:25 AM
    Is the capital sum owed at the end of the mortgage 90k? What about what you have left to pay in interest? It looks pretty clear your endowment won't cover the amount so you will have to sell.
    Know what you don't
    • AnotherJoe
    • By AnotherJoe 24th May 19, 10:28 AM
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    AnotherJoe
    • #3
    • 24th May 19, 10:28 AM
    • #3
    • 24th May 19, 10:28 AM
    Have you considered getting a new mortgage of 30k to pay off the remainder?
    Also, if you look at costs of selling, buying, stamp duty, refurbishment etc it might easily be 10k and if you dont need to move, why waste that money?
    And yes, you could also keep the endowment running, buy a house for say 200k with the 210k in the current house, and in 3 years have 60k cash.
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • AnotherJoe
    • By AnotherJoe 24th May 19, 10:29 AM
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    AnotherJoe
    • #4
    • 24th May 19, 10:29 AM
    • #4
    • 24th May 19, 10:29 AM
    Is the capital sum owed at the end of the mortgage 90k? What about what you have left to pay in interest? It looks pretty clear your endowment won't cover the amount so you will have to sell.
    Originally posted by Exodi

    They will not "have" to sell if they can cover the 30k from elsewhere, such as another mortgage. Also, depending upon the type of endowment there may be a bonus and the sum received more than the 60k.
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • Thrugelmir
    • By Thrugelmir 24th May 19, 10:33 AM
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    Thrugelmir
    • #5
    • 24th May 19, 10:33 AM
    • #5
    • 24th May 19, 10:33 AM
    Have you spoken to your current lender about extending the mortgage term?

    Can you afford to over pay the mortgage now?


    Start taking action now rather than later. Time will soon pass.
    The stock market is a device for transferring money from the impatient to the patient. Warren Buffett
    • Exodi
    • By Exodi 24th May 19, 10:41 AM
    • 750 Posts
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    Exodi
    • #6
    • 24th May 19, 10:41 AM
    • #6
    • 24th May 19, 10:41 AM
    They will not "have" to sell if they can cover the 30k from elsewhere, such as another mortgage. Also, depending upon the type of endowment there may be a bonus and the sum received more than the 60k.
    Originally posted by AnotherJoe
    Actually, of course you're right. Not quite sure why I said they'd have to sell now

    I blame the excitement of the bank holiday weekend personally!
    Know what you don't
    • Socajam
    • By Socajam 24th May 19, 11:28 AM
    • 359 Posts
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    Socajam
    • #7
    • 24th May 19, 11:28 AM
    • #7
    • 24th May 19, 11:28 AM
    I agree with AnotherJoe : take out a mortgage for the 30k.
    What I did with my endowment when I realized there was going to be a shortfall was to change my mortgage to a repayment, overpaid on the mortgage and continue to pay the endowment.
    When the endowment ended, I walked away with over 50k
    Best decision I ever made.
    • fairylights100
    • By fairylights100 24th May 19, 6:31 PM
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    fairylights100
    • #8
    • 24th May 19, 6:31 PM
    • #8
    • 24th May 19, 6:31 PM
    Thank you for advice. I didn’t realise some endowments have a bonus so I will need to look into it. We are quite happy to move, but seems we do have other options so I will explore extending the mortgage first I think and take it from there. We’re in our mid 40s though so not sure if that will affect our options in terms if taking out another mortgage.

    Is it best to speak to a financial adviser as I’m also not sure when is the best time to do all of this. If we sell, should we do it now or much nearer to the end of the mortgage?

    Thanks again
    • Thrugelmir
    • By Thrugelmir 24th May 19, 6:36 PM
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    Thrugelmir
    • #9
    • 24th May 19, 6:36 PM
    • #9
    • 24th May 19, 6:36 PM
    Were in our mid 40s though so not sure if that will affect our options in terms if taking out another mortgage.
    Originally posted by fairylights100
    Repaying 30k before you retire doesn't appear to be an issue. Subject to you meeting your lenders criteria.
    The stock market is a device for transferring money from the impatient to the patient. Warren Buffett
    • Ms Chocaholic
    • By Ms Chocaholic 24th May 19, 6:39 PM
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    Ms Chocaholic
    Can you cut back on your spending and overpay the mortgage now and hopefully with a bonus and your overpayments you will bring the amount owed down.
    Thrifty Till 50 Then Spend Till The End

    You can please some of the people some of the time, all of the people some of the time, some of the people all of the time but you can never please all of the people all of the time
    • amnblog
    • By amnblog 24th May 19, 7:38 PM
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    amnblog
    Sounds like you would benefit from some Professional advice.

    In the meantime.

    You say the mortgage ends in 3 years and unless you have made any changes the endowment will also end at the same time. If you have an endowment with three years to run, pay it right up until it ends (maturity) for maximum benefit. You can think of it a savings plan. You can use it to pay off some of your mortgage but you do not have to.

    If you sell now in order to move you will bank 210,000 less sales costs.

    If that is sufficient deposit for your next home the endowment does not need to be touched.

    You will have one of two types of endowment.

    With profits - if this type there will be a relatively large bonus added when the plan matures. This is known as a terminal bonus. Worth waiting for.

    Unit linked - if this type the value will vary day to day as the values of the underlying investments move. In this case it is worth paying attention to make sure you do not cash it in when unit values are particularly low. For example in a recession.

    If you look at the paperwork if will mention With Profits or Unit Linked which lets you know which you have.
    Last edited by amnblog; 24-05-2019 at 7:41 PM.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • AnotherJoe
    • By AnotherJoe 24th May 19, 8:02 PM
    • 14,701 Posts
    • 17,593 Thanks
    AnotherJoe
    Thank you for advice. I didnt realise some endowments have a bonus so I will need to look into it. We are quite happy to move, but seems we do have other options so I will explore extending the mortgage first I think and take it from there. Were in our mid 40s though so not sure if that will affect our options in terms if taking out another mortgage.

    Is it best to speak to a financial adviser as Im also not sure when is the best time to do all of this. If we sell, should we do it now or much nearer to the end of the mortgage?

    Thanks again
    Originally posted by fairylights100
    Not at all!! Say you got a 20 year mortgage which would only take you to standard retirement sort of age , that would be about 150/month. Affordable surely? especially with no endowment to pay.

    Do you actually want to sell or are you being forced into considering it because you don't think that 150/month sort of expenditure is doable?
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
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