Given these 2 options, which one would you choose?

[saltire]

Cashing in an Endowment after 15 years (10 still to run).
Haven't got the final total yet. 2 options that were suggested to me by the Financial Adviser were

1. Pay off part of the mortage with it, and change payemnts to show this
2. Pay the sum into a high interest account. There is a long story attached to this, so would just appreciate some opinions please

Depends on what your financial situation is like every month - could you do with the extra mortgage money that you would save if you reduced it?

At the moment I'd be inclined to pay off part of the mortgage.

dh suggests it depends on the current rate on your mortgage and what penalties might be enforced. Also interest rate on a/c after tax.

Depends what's more important to you, money in the bank to use if needed or lower monthly mortgage repayments/shorter mortgage term
Or a bit of both

FWIW, I would choose mortgage

For what original purpose did you get the endowment? If it was to help pay off the mortgage then that is what I would do. If you think that there is a chance that you will want it agin for some other purpose then have you considered an offset mortgage?

From an efficiency point of view you pay mortgage interest out of taxed income whilst you pay tax on interest from a savings account (once you've used your ISA allowance). In general it is always more efficient to reduce your interest payments wherever possible.

It was to pay off the mortgage, had a huge row with Scottish Amicable/Prudential over it, so took advice. Thats what was suggested to me

Thinking vaguely about your other threads, if you reduced your mortgage payments could you afford to quit your job and home ed your DSs until you can move back to Scotland?

What is the highest interest rate you can get in the bank for it? Assuming SAFE investment. What is your mortgage rate? If the mortgage is cheap, and you get a higher interest rate by investing the money, that is what I would do.

Pay off part of mortgage

(with view to pay of the mortgage with the money later)

The account I would put it into has a rate of 10% AER. mortgage is curently 5 I think, will need to check

10% seems ambitious - where can you get that ? Sunday Times lists 7% as top rate on today's tables,for a fixed rate bond , deposit a/c 6.5% .

It's a Halifax one, on tehir website. I ahve spoken to them about it

Looking at it (one on their front page ?) it is only the regular saver amount that attracts 10%(or perhaps 12%). So the maximum you can put in there is 6k over 12 months but it will take you a year to accrue that balance which is locked in for the duration and then the rate could change. It is the rate on your nominated account that really makes a difference to your decision.