Endowment Mortgage Maturity

Required Reading


  


Endowment Mortgage Maturity

ake a look at the total 'estimated maturity value' of the two plans. The pension plan produces more than three times the value of the endowment policy -thanks in part to the favourable tax treatment of pension funds. So not only do you still have a cash surplus to spend, but also you've provided yourself with a pension of £112,717 a year for life -and all for an extra £114.34 a month after tax.

So far, we have only been considering the position of a basic-rate taxpayer. If you are a higher-rate taxpayer, however, it gets even better. The pension premium of £172.99, which effectively costs the basic-rate taxpayer £151.10, costs the 60% taxpayer just £129.20 (the rest is tax relief). For the very high-rate taxpayer, therefore, running his mortgage in this way is actually cheaper than a low-cost endowment, and yet it produces three times the benefit.

Table 19 provides another example of a pension mortgage plan, this time for a 'unit linked' plan at various rates of tax.

Table 19 The cost of a pension mortgage plan at varying tax rates

1 Male aged 40 next birthday, retiring at 65, with a £125,000 mortgage

(a) Basic-rate taxpayer

Mortgage interest


Want more informationfee free mortgages

Building Societies or Banks


Now the major building societies who were prepared to lend on this basis included the Halifax, Bristol & West, National & Provincial, Woolwich, Alliance, Anglia, Britannia, Gateway and Cheltenham & Gloucester.

The rate of interest charged on these sorts of loan is generally higher than on a straightforward repayment mortgage. Most of the societies charge their endowment rate is, 0.0025 to 0.005 above their 'base' rate. A few charge an extra 0.005 above that.

If you compare an endowment to a pension mortgage, two main factors stand out. The pension route is far more tax-efficient and offers better value because of this, but the figures involved are that much higher. Because of the rules on the amount that you can take as cash, compared to the . . .... see: Building Societies or Banks


Current Mortgage Offers

  • At Commercialise Yourself you can compare mortgages using our repayment calculator, look for special offers for first time buyers or for 95% loan to value mortgages and see the most popular choices, Nationwide, Accord etc, we now even have a buy to let section for the brave or heart or strong of pocket! You can send us an email if you want to know more about mortgages and what we do and we will get back to you as soon as we are able. offers@commercialise.org.uk

     

    Finding the right mortgage can be stressful, but we’re here to help you every step of the way.

    Even if you have no proof of income, poor credit rating or facing repossession of your home, we can normally say YES (even if the high street lenders have said NO)!

    Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage. The overall cost for comparison is 7.9% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration. There will be a fee for mortgage advice. The precise amount will depend upon your circumstances but our average fee is 2.36% of the loan value. We are authorised and regulated by the Financial Services Authority for regulated mortgage and non-investment insurance contracts.