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should I sell my endowment ?
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# 1
oops a daisy
Old 22-06-2007, 10:54 PM
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Question 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
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# 2
EdInvestor
Old 22-06-2007, 11:13 PM
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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.
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# 3
oops a daisy
Old 22-06-2007, 11:15 PM
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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 ) I will give L & G a ring and see what they say. Thanks for replying
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# 4
dunstonh
Old 23-06-2007, 1:20 AM
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We also need to know the current terminal bonus that is accrued on the plan.
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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# 5
oops a daisy
Old 23-06-2007, 2:44 PM
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Quote:
Originally Posted by dunstonh View Post
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

now I have answered that question I am not sure I have understood the question - is that right :confused:
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# 6
dunstonh
Old 23-06-2007, 3:15 PM
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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 a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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# 7
EdInvestor
Old 23-06-2007, 4:07 PM
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An endowment's maturity value is based on the total of the guaranteed value and the terminal bonus (aka the unguaranteed value).

Quote:
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.

Quote:
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.
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# 8
Gorgeous George
Old 23-06-2007, 4:10 PM
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Quote:
Originally Posted by EdInvestor View Post
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
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# 9
oops a daisy
Old 23-06-2007, 6:56 PM
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Quote:
Originally Posted by Gorgeous George View Post
... but that's not the terminal bonus - not even if it's the ex who is terminated.



GG
now theres wishful thinking but Im over that now

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
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# 10
oops a daisy
Old 26-06-2007, 2:47 PM
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Quote:
Originally Posted by EdInvestor View Post
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

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 ?
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Last edited by oops a daisy; 26-06-2007 at 2:51 PM.
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# 11
oops a daisy
Old 03-07-2007, 1:35 PM
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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
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# 12
EdInvestor
Old 03-07-2007, 5:26 PM
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Please provide the following info for both plans (either separately or combined together)


Guaranteed sum assured
Declared bonuses
Surrender value
Monthly premium
Maturity date
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