mortgage and endowment help

Thrugelmir · 3 February 2018 at 12:50PM

What's the projected maturity value of the policy?

silvercar · 3 February 2018 at 2:04PM

Check you are comparing like with like.

The sell option means selling the endowment, putting all the proceeds to reduce the mortgage balance. Taking out life insurance to cover what you had in the endowment. Then looking at your current repayments, adding on the amount you currently pay towards the endowment, less the new life insurance cost, seeing how that compares with keeping the endowment and what it would need to achieve in order to match the sell option. See if that looks reasonable.

So currently a 77k mortgage with £112 in endowment payment a month.

Surrender at 26k, leaves you with 51k mortgage and no endowments. If you continue paying the mortgage as if it was 77k and shove an extra £112 (less whatever life insurance for 77k is) , how soon would you clear it / what balance would be owed after 7 years?

Compare that with an estimate of what the endowment will produce at term.

flopsy1973 · 5 February 2018 at 10:37PM

Thrugelmir wrote: »

What's the projected maturity value of the policy?

The projected amount is 43,000 with Prudentials view that 4.5% each year is assumption for future growth.

dunstonh · 5 February 2018 at 11:02PM

flopsy1973 wrote: »

The projected amount is 43,000 with Prudentials view that 4.5% each year is assumption for future growth.

It is not Prudential view that they use 4.5%. The regulator controls the assumed growth rates.

A fund growing consistently at 4% p.a. may use 4.5% just as a fund with 10% p.a. will do.

flopsy1973 · 5 February 2018 at 11:04PM

silvercar wrote: »

Check you are comparing like with like.

The sell option means selling the endowment, putting all the proceeds to reduce the mortgage balance. Taking out life insurance to cover what you had in the endowment. Then looking at your current repayments, adding on the amount you currently pay towards the endowment, less the new life insurance cost, seeing how that compares with keeping the endowment and what it would need to achieve in order to match the sell option. See if that looks reasonable.

So currently a 77k mortgage with £112 in endowment payment a month.

Surrender at 26k, leaves you with 51k mortgage and no endowments. If you continue paying the mortgage as if it was 77k and shove an extra £112 (less whatever life insurance for 77k is) , how soon would you clear it / what balance would be owed after 7 years?

Compare that with an estimate of what the endowment will produce at term.

Right i hope i'v worked this out correctly??? if we pay £638 a month which includes the extra 112 a month from the endownment then after 7 years there would be a balance 0f £55,504 left.
The estimate for the endownment in above post is 43K

I have not included insurance in this estimate as we need to review this also as we have 2 separate policies at the moment which need to be reviewed
thanks

flopsy1973 · 6 February 2018 at 10:41PM

any thoughts with this

silvercar · 6 February 2018 at 11:27PM

If you pay the endowment proceeds £26k now off the mortgage and keep the repayments at about £638 that you are paying now, in 7 years you will have cleared the mortgage (roughly speaking, depending on interest rates etc). So that would be a certainty.

The other option is to keep going with the endowment and take the new mortgage over a longer term (to allow for a lower monthly repayment) and hope that the combination of having a repayment mortgage and a maturing endowment gives you cash at the end.

Combine either of those options with an offset mortgage so you gain on any short term savings you have for further gains.

I can't predict what the endowment will pay out at, crystal ball territory. People seem to think the 4.5% assumption is low, so you could estimate higher - which means more than the 43k you are talking of.

flopsy1973 · 7 February 2018 at 12:04PM

silvercar wrote: »

If you pay the endowment proceeds £26k now off the mortgage and keep the repayments at about £638 that you are paying now, in 7 years you will have cleared the mortgage (roughly speaking, depending on interest rates etc). So that would be a certainty.

The other option is to keep going with the endowment and take the new mortgage over a longer term (to allow for a lower monthly repayment) and hope that the combination of having a repayment mortgage and a maturing endowment gives you cash at the end.

Combine either of those options with an offset mortgage so you gain on any short term savings you have for further gains.

I can't predict what the endowment will pay out at, crystal ball territory. People seem to think the 4.5% assumption is low, so you could estimate higher - which means more than the 43k you are talking of.

She can pay more now so surely it better to pay more to get the mortgage finished with rather than paying less for longer??? and the chances of that endownment giving us any surplus is not known.
We do have short term savings so we could make further savings here????

silvercar · 7 February 2018 at 5:39PM

flopsy1973 wrote: »

She can pay more now so surely it better to pay more to get the mortgage finished with rather than paying less for longer??? and the chances of that endownment giving us any surplus is not known.
We do have short term savings so we could make further savings here????

Personal choices based on attitude to risk.

mortgage and endowment help

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