Endowment Policy : Sell or Surrender

EdInvestor

loops298 wrote: »

My projected values are :

3.5% - £26200
4.5% - £27700
7.5% - £32400

Are these up to date figures?


I said:

If you cashed the policy in and used the lump sum to reduce the mortgage, also increasing the mortgage payment by the amount of the redundant premiums to maturity then your return would be 26,591.

On that basis you should keep the policy.However the figues don't look right, suggest you ring up for an update.

loops298

I am waiting for new figures to arrive, they are from Aug 2007.

loops298

Just spoken to Scottish Life the projected figures are now:

3.5% - £24100
7.5% - £28800

It just gets better!

EdInvestor

You would be better to surrender ands reduce the amount owed. You can then use the premium money to increase your mortgage payments.

loops298

EdInvestor - thanks for your comments, much appreciated.

Having looked at the figures I had come to that conclusion, I think I am flogging a dead horse by keeping the policy. I will get more back than I have put in by surrendering it (when only taking the actual monthly payments into account, not any interest I would have earned if I had invested the money) so I think it's probably a good time. And looking on the bright side - the SV has increased by £10 since last week

loops298

Have tried to sell it, and have recieved one offer - for £500 more than the SV. That has confirmed that I definately need to get rid of it! :T

Just one final question..... which is the best route to take now regarding the money that I was using for the Endowment? Should I invest it in an ISA and wait to make a lump sum payment at the end of the mortgage term (6 years from now), or should I use it to overpay the mortgage amount each month? (It will be in addition to £100 that I am also putting away towards the mortgage from a maxi ISA I dispensed of two years ago.)

EdInvestor

loops298 wrote: »

Just one final question..... which is the best route to take now regarding the money that I was using for the Endowment? Should I invest it in an ISA and wait to make a lump sum payment at the end of the mortgage term (6 years from now), or should I use it to overpay the mortgage amount each month?

Hard to beat the 6.18% guaranteed tax free return you'd get by overpaying the mortgage. But it really depends on your attitude to risk.

loops298

I have just fixed my mortgage rate at 6.18% for 5 years, and as the overpayment is optional, if the interest rates change on savings, I can always change my mind. I need to be happy that at the end of the 5 years I have paid off at least £9k (60 payments of £150) from the mortgage as I am splitting the mortgage part repayment and part interest only, and have to find someway of covering the interest only part - hence using the £150 towards it.