Should I invest my endowment compensation?

Q I have just received £5,500 in compensation from Standard Life for my endowment shortfall of £16,000. Should I pay this off the mortgage and convert to a repayment, or I invest it somewhere and keep the mortgage as interest only? It is due to finish in 10 years and I would like it to be paid one way or another in that time. The mortgage is for £60,000 and so far no capital has been repaid. The endowments cost £120 per month and I do not know whether to surrender them, sell them or keep paying into them in the hope of getting something back.
MM

A If you want to be absolutely sure that your mortgage will be paid off, using your compensation money and converting to a repayment mortgage would be the best plan.

If you invested the £5,500 compensation, you would have just under £9,000 at the end of ten years (assuming growth of 5% after tax). There would still be a shortfall of £7,000 to find to be able to pay the mortgage off in full, assuming that your endowment does end up paying out the projected £44,000.

The downside of converting the mortgage to repayment is that your monthly mortgage payments will have to increase quite dramatically. With a mortgage interest rate of 6%, for example, your monthly payments would rise from £300 to £666 over a 10-year term.

An alternative to converting the whole mortgage to repayment might be to convert some of it. If you kept £40,000 of the debt on an interest-only basis, for example, and converted the remaining £20,000 to repayment, the monthly mortgage payments would be a more manageable £422 at 6% interest.

As for what you should do with your endowments, it is hard to say, as there is no way of knowing what you will get back when they mature in a decade. But as a rough guide, if you would get back less than you have paid in by selling or surrendering them, it is probably best to keep them going.