Endowment mortgage v paying off lump sum

[Liskey]

I wonder if anyone could help with this question re endowment mortgages versus repaying lump sum?

We took out an £64000 endowment in 2000 (young and foolish first time buyers).

We moved 10,000 of it to repayment basis about 10 years ago, so only has to get £54,000. The mortgage letter we've received this year says its on track and should make the full amount predicted. Is it worth continuing to pay this or is it likely to fall off track now? It looks like I might be coming into enough money shortly to pay off a big lump sum of the mortgage so am trying to decide if we should continue paying into the endowment. Or can I cash it in?

Cheers

what period does the endowment cover?

ours was only 20 years & taken out in 1983. It was supposed to mature with a massive surplus, but instead fell short (luckily not by much, & we inherited some money which covered the shortfall, but if not...)

I would say do not trust the mortgage letter & do use the new money to pay off as much as poss

Cheers for that.

Endowment has got another 12 years to run - and lowest predicted percentage is 4 per cent.

I think later endowments were more realistic so you should be ok - why not pay off a bit more of your mortgage, keep some for savings & keep the endowment running too?

Thanks for that.

Me and DH have been talking about whether we can keep the endowment going - other hurdle at the moment is that I am going to be made redundant shortly. So it's whether that is affordable - though hopefully so.

We'd definitely like to pay off a chunk of the mortgage though as it seem sensible and would reduce monthly outgoings.

remember that you have life insurance connected to your endowment policy so might be as well to keep it going if you can.

Yes thanks for that. I've just checked and we took out an extra £40000 as well as mortgage sum when we took out life and critical illness cover. That will probably be expensive to replace now we're both a bit older and we now have DC to think about as well.

Have you thought about moving to an offset mortgage and offsetting the money you are expecting (and some of your other savings perhaps) against the loan; at the same time keeping your endowment going. As long as you are both good with money and trust each other this could give you a lot of flexibility as well as lower monthly payments.

I don't know anything about offset mortgages so it might be worth trying to find out about them. We're ok with money and don't have any other debts.