Mortgage Cashing in Endownment

joanne1971

Hi

My partner and I were thinking of moving so began looking into all the ways of raising a desposit. However, it become obvious we can't afford to move so will just stay here.

But in the course of this research we realised that cashing in his old endownment might be a good move. We are thinking of cashing it in and paying a lump sum off our current mortgage or putting it in a high interest account.

The curent mortgage is £67000 - I am not sure what the interest rate is but could find out.

His endownment was for £52000 and is currently worth about £25000 with 7 years till maturity - but it has paid no bonus since 2002. He pays £85 a month premium (which we could use for over payments on the mortgage)

Do you think it would be better to cash this in now? or just wait till maturity in 7 years.

All advice appreciated.
jo

EdInvestor

Post some info about it

Provider
Guaranteed sum assured
Declared bonuses
Surrender value
Monthly premium
Maturity date
Maturity projections
Interest rate payable on mortgage

joanne1971

Thanks for your reply:-

Provider: Scottish Provident
Guaranteed sum assured: £16,943
Declared bonuses: £8,444
Surrender value: - Is this the Total policy benefit? - if so this is £25,387
Monthly premium: £76.12
Maturity date: 22/8/16
Maturity projections
Interest rate payable on mortgage

joanne1971

Thanks for your reply:-

Provider: Scottish Provident
Guaranteed sum assured: £16,943
Declared bonuses: £8,444
Surrender value: Is this the Total policy benefit? - if so this is £25,387
Monthly premium: £76.12
Maturity date: 22/8/16
Maturity projections: 4% -£29,400, 5.75% - 33,700, 7.5% - 38,500
Interest rate payable on mortgage: 4.99%- Current paying interest only and tied in till March 2010. After research today can only pay £5000 off as a one off over payment - but can pay less then £500 as regular overpayments.

I am confused!!!

Thanks
jo

EdInvestor

joanne1971 wrote: »

Surrender value: Is this the Total policy benefit? - if so this is £25,387

No, that's something different.You should be able to get the surrender value over the phone.

joanne1971

Thanks

I have tried to call them today but there computer system is down. I will post as soon as I can get it.
Really appreciate it.
jo

joanne1971

Just spoke to them the Surrender value is £15,521.

Does not seem very much at all.

Would really appreciate some advice.

EdInvestor

joanne1971 wrote: »

Maturity projections: 4% -£29,400, 5.75% - 33,700, 7.5% - 38,500

If you cashed in the edowment and used the money to reduce the mortgage @4.99% over the term, then your return would be 29,447.

This is better than their projected 4% return which is the most likely outcome over the next seven years, and you would not be taking any risk.

There's little point in keeping this policy as the risk premium has gone.

feisty1

I am becoming increasingly alarmed seeing information posted by EdInvestor encouraging people to cash in policies with life assurance attached. I am well aware this is an information only site, however people with varying degree's of financial knowledge use this site. Information I see offered is "if you cash in this endowment you will be able to pay off mortgage" Their are much wider implications to cashing in a plan, some people will be aware of this, other's not.......EdInvestor you should have the moral grace to remind people of this................

joanne1971

Thanks really appreciate that advice

Anyone got any advice about how we go on about selling it.

jo

joanne1971

Thanks - yes I am aware of the life policy aspect, however, my partner has a good life package with work so that is not too relevant to us.