Help needed. Repayment/endowment ratio.

adandem

We are in the process of remortgaging and I am in a quandry as to what to do about our endowment policies.

We have 2 policies, both due to mature in 2018, they were supposed to cover a mortgage £35000 but we have reduced our interest only part of the mortgage to £25,000.

I don't want to cash in the policies yet as they are both eligible for the windfall payment i believe.

I would like to know if:

We go for a 5 year fixed rate, can we sell the policies in this time or will we have to wait until the 5 years is up?

If we continue with the policies, are they likely to be worth enough?
I have phoned NU for some info. but they have to post it. The policies cost a total of £49 per month.

Policy 1 - matures May 2013, cost £28 pcm.
basic sum assured - £5780, surrender £5834
projected shortfall - 4% £7,300 6% £5000 6% £2200

shortfall payout promise of £3500.

Policy 2 - matures September 2013 cost £21pcm (figures as at Sep 2007)

basic sum assured £4335 surrender £4137
projected shortfall 4% £6010 6% £4100 8% £1400

shortfall promise of £2800.


Any help appreciated!!

EdInvestor

adandem wrote: »

I don't want to cash in the policies yet as they are both eligible for the windfall payment i believe.

Were they previously with Commercial Union or General Accident?These are the policies due the windfalls.NU branded policies are not eligible.

I would like to know if:We go for a 5 year fixed rate, can we sell the policies in this time or will we have to wait until the 5 years is up?

The policies are not connected to the mortgage, you can sell or surrender any time.

If we continue with the policies, are they likely to be worth enough?

Please post the monthly premium for each policy, and the projected maturity totals for each policy.Also post the interest rate you are paying on the existing mortgage and remortgage.

adandem

They were CU policies.

Monthly premiums are £28 and £21, I am waiting for NU to send me the maturity projections, they said they won't give them to me on the phone.

Our current and soon to expire mortgage rate is 4.99%, our new mortgage rate looks likely to be 5.99%. It's for £82000, £25000 interest only. 35% ltv.

Thanks;)

adandem

Anybody

EdInvestor

Sorry, need the projections to make a proper comparison.

adandem

Okay, I have all the figures.


Policy 1 projected payment 4% £12,700 6%£15,000 8%£17,800

shortfall payment promise of £3,500

Policy 2 projected payment 4% £8,990 6%£10,990 8% £13,600

Shortfall payment promise £2,800

Not sure about the extra bonuses that are going onto these policies?

Hope this helps,
Thanks in advance.;)

EdInvestor

Would you mind just checking your figures ?

The results I am getting after inputting them don't look right.

Surrender values
Forecast maturity values
Monthly premiums

What are the guaranteed values of each policy (basic sum assured plus declared bonuses)?

adandem

Here goes, but although I have the BSA, I don't have the declared bonuses I'm afraid.

Policy 1 £28 pcm. (target £20,000)
BSA -£5780
Forecast maturity values - 4% - 12,700 6%15,000 8% 17,800
Surrender value £5834

Policy 2 £21pcm (target £15,000)

BSA £4335
Forecast maturity values -4% £8,990 6%£10,990 8% £13,600
Surrender value - £4137.

Thanks again.

EdInvestor

Very mysterious.

If you cashed policy 1 in now and used it to reduce your mortgage, also increasing the mortgage payment by the amount of the premium to maturity @5.99% (your new mortgage rate) your return would be 9,758 at maturity.

Yet they are forecasting a return of 15,000 if the policy achieves 6% growth.Sorry, but it doesn't add up. Either the forecasts or the surrender values are wrong or they are including in there some mighty windfalls/reattribution amounts, may be worth checking that.

DarrenB

Hi,

Well done to all who have been awarded compensation re endowment mis-selling... you've inspired me to have go!

I now have my questionnaire from the firm who are investigating my complaint.

There is a section on the form asking for my 'attitude to risk' - what sort of answer are they looking for? Not sure what to put...I'm afraid if say 'I understood the risk' my claim will be thrown out...?

Any advice very gratefully received!!!

Cheers!