Should we pay off our mortgage with redundancy money?

Q My husband is about to be made redundant and we were thinking of paying off our mortgage with the redundancy money. We have an endowment mortgage and have heard that the endowment will probably be a lot less than what we owe. We have another l2 years to pay. Do you think it would be wise to pay off the mortgage and then sell the endowment?

JP

A The short answer is yes - I do think it would be sensible to pay off the mortgage because borrowing money inevitably costs more than what can be achieved by investing, especially when taking tax into consideration.

You don't say for how long you have had the accompanying endowment policy, however I do think you should consider selling it - perhaps on the second hand market where you may get a higher price than the early surrender value offered by the insurance company. The money you are currently paying in premiums to the mortgage company and the endowment policy could well be more profitably invested elsewhere - such as an Individual Savings Account (Isa) either for income or growth. Before you take any action, it may be worth checking whether you were "missold" the endowment policy by whoever recommended it to you. There has been a lot of publicity in the press about compensation being paid where slick salesmen failed to give proper warnings that the endowment policy might grossly under-perform and fall well short of generating the sum required to cover repayment of the mortgage.