should I sell my endowment ?

I know this gets asked a lot on here but I would really like somebody with a bit more knowledge on the subject to look at my figures for me please. My endowment details are as follows
start date 29.08.91 maturity date 29.08.16 so has 9 years to go
basic sum assured £17193.00 attaching bonuses £7292.00
monthly premiums £73.74
The surrender value offered from L & G is £19248.70
highest offer from APMM is £20698.00
My mortgage details are as follows
Interest only balance owing £33765.00 ( original mortgage was for £55k but have made unrestricted overpayments due to redundancy payout, savings, small inheritence and monthly overpayments of what ever I can make )
Mortgage taken out on a tracker at a small % above BOE rate in October of last year fixed for 5 years current rate 5.84%.
OK so my thinking is that if I surrender my endowment I will be 'saving' the monthly premiums of £73.74 per month and 'saving' interest payments on £20698 ( approx £100 per month ) so total 'saving' would be £174 per month approx. I would be left with a mortgage balance of £13067 which ideally I would like to pay off before the 5 year fixed rate ends.
Basically I would like to know if the offer that has been made by the APMM member is a fair offer - seems good to me but I have no experience in these matters. I think I would be better off doing the above as having a mortgage of about £13k would leave me at much less of a risk to increased interest rates. Also I have not actually got another job yet and think that I would be protecting my 'savings' by paying off my mortgage with them should I not get another job soon.
Am I thinking along the right lines :confused:
Thanks for reading :)
:cool: Official DFW Nerd Club Member #37 Debt free Feb 07 :cool:
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Comments

  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    Provide some maturity forecasts from L&G and then we can work out if you will beat them by using the money instead to reduce the mortgage.
    Trying to keep it simple...;)
  • oops_a_daisy
    oops_a_daisy Posts: 2,460
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    ah sorry I dont have them ( and there was me thinking I had all my facts & figures ready before I posted :o ) I will give L & G a ring and see what they say. Thanks for replying :)
    :cool: Official DFW Nerd Club Member #37 Debt free Feb 07 :cool:
  • dunstonh
    dunstonh Posts: 116,040
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    We also need to know the current terminal bonus that is accrued on the plan.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • oops_a_daisy
    oops_a_daisy Posts: 2,460
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    dunstonh wrote: »
    We also need to know the current terminal bonus that is accrued on the plan.

    that one is easy - £56K
    2 lives assured ( mine & my ex )
    endowment is assigned to moi :D

    now I have answered that question I am not sure I have understood the question - is that right :confused:
    :cool: Official DFW Nerd Club Member #37 Debt free Feb 07 :cool:
  • dunstonh
    dunstonh Posts: 116,040
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    56k isnt the terminal bonus. Wish it was but it isnt.

    Many companies do not tell you the terminal bonus unless you ask for it. Some dont even show it on statements. The terminal bonus is where the bulk of the return is likely to be.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    An endowment's maturity value is based on the total of the guaranteed value and the terminal bonus (aka the unguaranteed value).
    basic sum assured £17193.00 attaching bonuses £7292.00
    Add these two together to get the guaranteed value at the moment - this will increase a bit as extra guaranteed bonuses are attached every year - but these bonuses tend to be pretty low these days.
    The surrender value offered from L & G is £19248.70
    The surrender value contains a combination of a proportion of the guaranteed value accrued so far (the full amount is only payable at the end) and the terminal bonus accrued so far.

    You should be able to find out what proportion of the surrender value the TB makes up. Sadly, not a lot these days.

    The 56k you mention is the target the endowment was supposed to raise to pay off the mortgage: it would only be paid out if you died before maturity.
    Trying to keep it simple...;)
  • Gorgeous_George
    Gorgeous_George Posts: 7,964
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    EdInvestor wrote: »
    The 56k you mention is the target the endowment was supposed to raise to pay off the mortgage: it would only be paid out if you died before maturity.

    ... but that's not the terminal bonus - not even if it's the ex who is terminated.

    :)

    GG
    There are 10 types of people in this world. Those who understand binary and those that don't.
  • oops_a_daisy
    oops_a_daisy Posts: 2,460
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    ... but that's not the terminal bonus - not even if it's the ex who is terminated.

    :)

    GG

    now theres wishful thinking :rotfl: but Im over that now :rotfl:

    sorry I did wonder if I had the right amount when I was writing it. I am having phone problems this weekend so when I get a landline again I will give L & G a ring and find out the rest of the info.

    Have a great weekend - OOPS
    :cool: Official DFW Nerd Club Member #37 Debt free Feb 07 :cool:
  • oops_a_daisy
    oops_a_daisy Posts: 2,460
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    EdInvestor wrote: »
    Provide some maturity forecasts from L&G and then we can work out if you will beat them by using the money instead to reduce the mortgage.

    ok then in reply to the above, L & G are having to work it our manually and will be putting this information in the post to me in the next 10 days :o

    and in reply to the question about the terminal bonus, it is currently 90% of the existing bonus of £7292.50 so I make that a terminal bonus of £6563.25


    sorry I cant get all of the information required straight away so I will have to resurrect this thread when all of the information comes through


    edited to add - what will Northern Rock want me to do if I do go down the route of selling the policy and paying off a chunk of my mortgage - will they just want me to take out some sort of life insurance ?
    :cool: Official DFW Nerd Club Member #37 Debt free Feb 07 :cool:
  • oops_a_daisy
    oops_a_daisy Posts: 2,460
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    I have just received the information from L & G however they have stated that a mortgage savings plan that I took out years ago to top up the initial endowment is included in the figures ( I thought it was seperate as the payments are taken seperately and they send seperate statements ). If it is of any use, L & G have also stated that the endowment is still on amber alert even with the mortgage top up plan to pay out the targetted amount.

    so the projected final amount at 4% each year is £45,800 £10,200 shortfall
    the projected final amount at 6% each year is £53,500 £2700 shortfall
    and the projected final amount at 8% each year is £62,000 £6000 surplus

    the monthly premium that I pay into the mortgage savings plan is £41.21 on top of the endowment payment.

    thanks for all of your help
    :cool: Official DFW Nerd Club Member #37 Debt free Feb 07 :cool:
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