2 endowments, 2 shorfalls. Help - do we surrender?

confusedofchingford

Can anyone out there advise please – my head hurts! Do we surrender?
Here goes:
Prudential –
to cover £26,000 interest only mortgage. This year’s bonus not yet declared.

Guaranteed Sum £9152.00
Declared Bonus £8376.36
Surrender Value £23114.00
Monthly payment £37.40
Maturity Date 28.11.2010

Maturity forecast £25600.00 4%
£26500.00 6%
£27500.00 8%

Mortgage rate 6.69% fixed to 31.7.09

Friends Prov. – to cover £19,000 interest only mortgage

Declared Bonus ? Part managed/part profit
Surrender Value £10547.13
Monthly payment £ 70.30
Maturity Date 09.12.2010

Maturity forecast £12900.00 4%
£13200.00 5.5%
£13800.00 8%

Mortgage rate 6.69% fixed to 31.7.09

We also have two repayment mortgages, £33,100 6.69% fixed to 31.7.09 ends 31.7.1014 and £40,200 6.19% fixed to 30.4.2010 ends 31.8.1014.

Two credit cards: £8100.00 Virgin % until May 09 Pay £25.00 pcm
£9765.00 B/card 6.9% life Pay £300.00 pcm
(£80.00+ pcm interest)

We are thinking of cashing in policies. If we pay this to the interest only mortgage now we will incur penalties, (don’t know how much yet) but we could wait until the fixed rate ends in July. Bristol & West say it will then cost £50.00 admin x 2 for the extra payments made.

What worries me is the credit cards, B/card £80+ each month is interest.

I have a good credit rating. My partner is a self-employed mini cab driver. We would prefer to pay as much off mortgage as we can or should we pay some towards the credit cards?

Thank you.

EdInvestor

confusedofchingford wrote: »

Prudential –
Maturity forecast £25600.00 4%
£26500.00 6%
£27500.00 8%

If you surrender this one and use the lump sum to pay off the mortgage also paying in the premiums to maturity, you wull end up with 27,286 which is better than their projection @6%. So I would surrender, especially as terminal bonuses on all WP policies are likely to fall over the next 2 years.

Friends Prov
Maturity forecast £12900.00 4%
£13200.00 5.5%
£13800.00 8%

If you did the same with this one you would end up with 13,701 at maturity almost equalling their top forecast which they have no hope of meeting. So this one should also go.

As for what to pay off, obviously avoid early redemption payments.Usually the advice is to pay off higher interest rate debt first.

confusedofchingford

Thank you for your advice but I am getting panicky as I can’t work out the sums.

If I multiply £37.40 by the 22 months left and likewise £70.30 it doesn’t get anywhere near the figures quoted in the reply above. Or is it higher because I am paying into the mortgage? I am being dim, that much I know.

What I was thinking was that we stopped the paying these premiums now, that would free up £107.70. When we pay in the endowment lump sums (end of July or earlier) we would stop paying the interest only mortgage, currently, £258.12. Added to the £107.70 we would have £365.82 to use towards a repayment mortgage and life assurance for the shortfall of £11,338.87. I would be hoping to pay this back in line with the current mortgages ending July/Aug 1014.

If I pay the lump sums now I will incur penalties but if I wait until July when the fixed rate runs out we will still be paying £258.12 on the interest only mortgage until the end of July. That doesn’t seem logical when we will have most of the money sitting in the bank so could reduce that payment now.

I really don’t know what to do. I keep going over and over these figures and not getting anywhere. Also having sleepless nights as I know I have got to get this right.

Any further help would be greatly appreciated.

dunstonh

I would keep the Pru. Its on track for a surplus and you are not far away.

EdInvestor

confusedofchingford wrote: »

If I multiply £37.40 by the 22 months left and likewise £70.30 it doesn’t get anywhere near the figures quoted in the reply above.

The figures are compounded and include the surrender values.

confusedofchingford

Hi everyone,
thanks for your earlier advice, EdInvestor and dunstonh. My earlier point raised was:

If I pay the lump sums now I will incur penalties but if I wait until July when the fixed rate runs out we will still be paying £258.12 on the interest only mortgage until the end of July. That doesn’t seem logical when we will have most of the money sitting in the bank so could reduce that payment now.

I rang Bristol & West just now. I can pay up to 10% off the interest only loan before each March without incurring penalties. If I pay all of the surrendered endowments into this mortgage now, £33,688.13, I will be charged £1,389.18 and a release fee of £195.00.

At least this is simple maths! I am going to stick this money in my savings account (lol), pay the cancelled premiums in as well and get another loan from B&W for the shortfall, will also re negotiate the mortgage rate early June for when the fixed rate end in July for one of the repayment mortgages.

I am still undecided as to whether to pay some of this money towards the credit cards. One is a % until May, £8,100.00, I could probably tart this to another % even if only for 6 months to buy some time, but would need to balance this out against any handling fee. The other is 6.9% life fixed rate, £9765.00 but the interest alone is £80+ a month and I currently pay £300.00 pcm towards this one

Any advice please? Thank you.

EdInvestor

The interesrt rate on the ccs and the mortgage is much the same so there is no advantage in paying off the cards at this point.If you can get a better mortgage deal later there may be.