Overpayment on Endowment or Repayment

magpie · 28 February 2006 at 10:24AM

We have a mortgage of £96,000,
£75,000 is on an endowment basis and
£21,000 is on a repayment basis.
Interest rate is 5.49% on both.
We have £7,000 to make an overpayment.
Can anyone advise whether it would be more efficient to pay off capital from the endowment or the repayment. Or does it not matter?

Merlin139 · 28 February 2006 at 10:34AM

Do you know how your Endowment Policy is performing?

Is it on track to give you £75,000? If it is then put it to the repayment.

But as you are not reducing your Endowment part you are always paying intrest on the total amount so logically it would make sense to make the overpayment on that.

Hope that helps

EdInvestor · 28 February 2006 at 10:39AM

Should you surrender your endowment and use the money to convert all to repayment and cut the amount owed?

Post some figs and we can check:

Guaranteed sum assured
Declared bonuses
Surrender value (ring up and ask)
Maturity date
Monthly payment

whiteflag_3 · 28 February 2006 at 12:05PM

magpie wrote:

We have a mortgage of £96,000,
£75,000 is on an endowment basis and
£21,000 is on a repayment basis.
Interest rate is 5.49% on both.
We have £7,000 to make an overpayment.
Can anyone advise whether it would be more efficient to pay off capital from the endowment or the repayment. Or does it not matter?

Why are you paying 5.49% ?
Are you tied into this deal?

magpie · 28 February 2006 at 2:38PM

We are tied in with our current mortgage until January 2007, after then we intend to re-mortgage.
The endowment part of our mortgage is as follows:-

Basic sum assured £22,553
Declared bonuses £11,220.50
Surrender value (ring up and ask) £23,246.10
Maturity date 3/7/2015
Monthly payment £98.00

Any help/advice would be gratefully received

Overpayment on Endowment or Repayment

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free