Should I cash my Endowment to Pay Mortgage?

wkgreatsix

Hi I'm a Newbie and would like some help/support as I seem to have managed to make wrong decisions (up till now?) usually with 'Expert' financial advice!
I would dearly love to be totally debt free and have got rid of the cards and loans bit already and have my first ISA (Yippee)
That leaves the mortgage
Start: £121,000, Current: £104,000 on quite a good deal I think with Woolwich. Offset Tracker set at 0.75% above base, currently offset by 70%, No penalty for over payment. I plan to leave as much offset as I can to reduce interest and whack as much as I can afford into overpayments. So far, Good plan?
I have an endowment which was taken out to pay an interest only mortgage with a previous lender (It is not assigned) and I think that it would be better for me to cash this, pay the settlement figure and future contributions into my mortgage?
Details as follows:
Scottish Life- Unit linked, 25yrs in Worldwide Fund, matures June 2016.
Premium £86.79
Sum assured £51,250
Bonus due 2010 & 2013 - 2%, Final bonus 2016 - 25% (From 34% Jan 2008!)
Plan value at 10/6/08 £12940.27
Settlement figure: 9/9/08 £12,802, 11/9/08 £12,636
Projections: May 2008 4%: £25,900, 5% : £27,800, 8% : £33,900
Today 4%: £24,500, 5% : Don't Know, 8%: £31,800
There is no guaranteed cash sum on maturity.

Given that I have invested £15,244.17 to date and need to put in another £8071.41 in order to make £1000 over the 25 years is it time to cut and run?
Is putting it all into the mortgage the right thing to do? I think it is, but there seems to be an awful lot of people out there with more financial smarts than me.

Thanks in advance for any advice.

gadjah543

You might be better posting this on the mortgage and endowments board.

dimbo61

first of all very well done on having 70% of your mortgage already offset !
No cc debt/ loans and your first ISA MARTIN would be proud another MSE in the making.
I read through your post and the 25% final bonus caught my eye DOWN from
34% in 9 months:mad:
If you cash in the endowment and pay this into your offset this gives you a guarenteed return of 5.75% tax free and you can save the £86.79 premium into cash ISA,s earning 6/6.25% tax free or overpay/ offset the mortgage.
Be carefull to fill all TAX free savings options first and try to pay as little interest as possible on your mortgage by offsetting and moving money out of the offset ( into savings TAX free )as the balance of the mortgage goes down by your normal monthly payments.
Your endowment might pay out more over the next 8 years but if you cash it in and pay it off the mortgage / offset you are getting 5.75% !
GOOD LUCK

dimbo61

Have you got and do you need life cover ?
Cavendish online do cheap level term life cover if you need it !

wkgreatsix

Sorry Being new, I thought about Mortgage and Endowment board first. Then I came upon this board which seemed to give more advice on the Mortgage paying solutions and Endowment cashing in advice than that board!?

wkgreatsix

Thanks for the advice. I intend to try and reduce the capital outstanding amount to 100% offset as soon as possible and then gradually drip feed savings vehicles to preserve the capital as much as possible. I know this might take longer, but just having some money in the bank for once has a kind of warm blanket feel about it! I would lose the Life insurance aspect of the policy of course, but I figure that the mortgage has technically 14 years to run and the endowment only 8- So I have to look at this anyway.

Thanks again.