Cash/Sell an Endowment?
Pringle
Forumite 4 Posts
Hi, New User here, 1st ever post, please be gentle. Been using the site over the last week and got me checking my finances, here goes....
I am thinking about cashing in or selling my endowment? Am I mad?
I had a part Interest Only & part Repayment mortgage but switched to a Full Repayment 2 years ago. My annual reviews showed it highly likely that I was going to have a shortfall on my endowment so I didn't want to take the risk and I also wanted to pay my mortage off earlier than the 25 years.
I've made some over payments on my repayment mortgage recently and have only 10 years to run.
My endowment has been going only just over 7 years and is basically now just a savings plan. I have been paying in £55 a month and its current value is about £5500.
What my thinking is now, is as the Endowment is not critical to my mortgage, would I be better to cash or sell this and use the money to pay off some more of my mortgate? By paying off £5500 would reduce my monthly premium by about £65, plus the £55 a month I currently pay into my endowment would make a monthly saving of £120!!
Sounds excellent to me, or am I missing something here? What about these final bonuses they talk about, also all the paperwork that goes with my Endowment says never cash in or sell? ???
Any advice would be appreciated, thanks.
I am thinking about cashing in or selling my endowment? Am I mad?
I had a part Interest Only & part Repayment mortgage but switched to a Full Repayment 2 years ago. My annual reviews showed it highly likely that I was going to have a shortfall on my endowment so I didn't want to take the risk and I also wanted to pay my mortage off earlier than the 25 years.
I've made some over payments on my repayment mortgage recently and have only 10 years to run.
My endowment has been going only just over 7 years and is basically now just a savings plan. I have been paying in £55 a month and its current value is about £5500.
What my thinking is now, is as the Endowment is not critical to my mortgage, would I be better to cash or sell this and use the money to pay off some more of my mortgate? By paying off £5500 would reduce my monthly premium by about £65, plus the £55 a month I currently pay into my endowment would make a monthly saving of £120!!
Sounds excellent to me, or am I missing something here? What about these final bonuses they talk about, also all the paperwork that goes with my Endowment says never cash in or sell? ???
Any advice would be appreciated, thanks.
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If you are a higher rate tax payer or close to being one, surrendering the endowment at this stage would leave you with a tax liability.
Many companies accrue a terminal bonus as you go along but only pay it on maturity. By surrendering, you lose that terminal bonus in part or full.
They would leave themselves open to a fine from the FSA were they to say different.
A basic cost analysis needs to be done to see whether it is worthwhile. ie how much are you going to pay between now and maturity, what is the projection, what will you save over the term of the mortgage by paying a chunk of that off, what is the target growth rate of the endowment? what is the cost of replacement life cover?