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Reduce mortgage or something else?

(10 Posts)
Lagoonablue Fri 02-Jan-15 22:51:40

I have an old endowment, not linked to a mortgage now due to mature next year. I'll get around £34 thousand. We recently moved and have a current repayment mortgage of around £130 outstanding.

Is it worth me using this endowment to pay some off the mortgage. My rough calculations show it to reduce monthly payments by about £200. This would be good as money is tight and we have a lot of outgoings. Our current mortage has around 15 years to run.

However it would also be great to do stuff to our house next year such as new kitchen and we will probably need a new car.

Just to add into the mix. I am a risk for redundancy , not in the formal sense but can see it happening. Would probably get a decent pay off though as have 20 years service.

Any idea if I should pay off the mortgage or spend the money? I know I need proper advice but would like to get a feel of what others would do? Thanks.

PenelopePitstops Fri 02-Jan-15 22:54:09

Oo hard choice. Check your mortgage as you may be hit by fees if you pay off more than 10% of the outstanding balance in a year.

I'd pay off a chunk of mortgage 25k ish and then use the rest for kitchen and car.

FullOfChoc Fri 02-Jan-15 22:56:55

Assuming you don't have any other debt?

I think I'd put aside 3 months salary to help if you do get made redundant and pay the rest to the mortgage. If you don't get made redundant then it can be for a car.

Personally, Id make do with the existing kitchen as a new one is a luxury IYSWIM.

Lagoonablue Fri 02-Jan-15 23:00:03

Thanks both. New kitchen will prob be a necessity in a couple of years time as starting to fall to bits!

Didn't think of early payment penalties.

Yes do have some debt but less than 3 grand between us which we would pay off of course. Î know that sounds alot but it has been worse!

I've got a year to think about it though!

Lagoonablue Fri 02-Jan-15 23:03:08

I wouldn't need to set aside money for redundancy as would get about 15 thousand in redundancy payments so that would cover me for a while.

I also need to factor in my public sector pension which would kick in in around 3 years. ( I am getting on.....)

Dilemmas. However I would love to be without this mortgage so should work to reduce that I guess.


PenelopePitstops Fri 02-Jan-15 23:04:42

Remember with the penalties you can still pay off quite large chunks each year.

Stay in you job if you think it may lead to redundancy (I know it sounds stupid but many people leave) with service like yours, you will get a decent payout.

I'd get a couple of kitchen quotes to see how much it would cost, this may aid your decision.

Lagoonablue Fri 02-Jan-15 23:12:39

Oh yes I am staying til they kick me out!

Mrscog Sat 03-Jan-15 15:57:40

I think paying a chunk off your mortgage would be good, even if you don't use the full amount for that. Let's say you reduced your payments by £150 per month, the really really sensible thing to do would then to plough some of that saving still on the mortgage - you could potentially reduce the term massively that way I'd have thought.

Let's say you use 3k to clear debts, then 10k on a kitchen (which sounds like a lot) that would leave you with 20k to take off your mortgage, either in a lump sum or spread out over a couple of years so you don't pay over any repayment threshold.

Lagoonablue Sat 03-Jan-15 20:46:40

Thanks. That's helpful.

RandomMess Sat 03-Jan-15 20:48:40

I think the interest rates will start to rise so pay off whatever has the highest interest rates! So I'd pay of what you can of your mortgage without incurring penalties too.

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