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standard life shortfall

Newbie so pardon me as this has probably been asked a thousand times before. Standard Life With Profits Endowment is likely to fall about 12K short of that required to pay off loan (16 years left). What are my best options. I currently have a capped rate mortgage which carries a 6 month redemption penalty amounting to about 2K (2 years left). What do people advise as the best options?

Reply to
jonfun
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Check with your lender. Changing the repayment type does not always mean invoking an early repayment charge. They may charge a small admin fee instead.

With regards the endowment, 2 options.

  1. Cash it in or sell it (You will loose life cover, so replacement will be needed)

  1. Keep it and hope for the best.(either as Savings or a repayment vehicle)

With regards the Mortgage, 4 options.

  1. Stay Totally Interest Only and hope the endowment gets better (Not Recommended)

  1. Stay Total Interest Only and make overpayments to the mortgage if allowed. (12k divided by 12 months, divided by 16 years = £62.50 per month)

  2. Change to Part and Part (Change shortfall to repayment and cross your fingers it does not get worse)

  1. Change to full repayment (Likely to be quite expensive)

Hope that helps

Reply to
Phil Deane

In message , jonfun writes

If you dont plan to move:

12K over 16 years is 750 per year, or 62.50 per month. So, in simple terms, investing 62.50 per month will grow to 12K plus interest after 16 years. You dont have to do anything with your mortgage.

If you do plan to move, one thing that I have done, in a roundabout kind of way, is to trade down over several moves, and use my equity so that I have no mortgage. I am guessing that you will have a lot of equity in your house, so this is something you could think of when you next move house, or as you are getting close to the end of the endowment term.

As it is not an immediate problem, there is plenty of time to sort it out without too much pain.

Reply to
Richard Faulkner

*May* be needed, not everyone needs life insurance.
2a, make it paid up, i.e. stop putting any more in but don't cash in the existing policy.

That depends on what you mean by expensive, it will cost more in monthly payments but the faster you lower the outstanding debt the less you pay in the long run.

Reply to
Stephen Burke

Agreed. That should read any protection in the policy, should be replaced if needed (But how many people don't want Critical Illness ,and how many need it?)

Agreed, just getting him ready for the shock when his lender says "Oh Mr X your new payment is double your last one"

Reply to
Phil Deane

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