Newbie: Would welcome advise on this endowment policy

BigLad_2

Hi folks,


Background:
I'm brand new here and unfortunately I'm financially clueless - but I’m hoping to rectify that. In addition to the information below my finances are a litany of 16 K credit card debt (all now shifted to life of balance cards), and an unsecured loan of around 10K from Lloyds, so my options are limited I guess.

Despite these issues my credit rating is actually good because I never default payments. I get by on my salary and have just enough to eke out a living.

So, onto my question.

The Dilemma:
Cash in endowment now or wait till maturity?

The Detail:

Old Endowment (Lloyds – now Scottish Widows):
1) Taken out July '93
2) Matures July 2018
3) To pay back £ 29,925
4) Latest projection Spring/Summer last years was:

Current value = £ 8454
If growth 4% If 6% If 8%
Projected Final Amount (£): 16,000 1 9,200 22,900
Projected shortfall (£): 13,925 10,725 7,025

New Repayment Mortgage & Unsecured Loan (Northern Rock):
4) Mortgage on property is now £ 77,585 with an associated unsecured loan of £ 24,450 = total of £ 102,035
5) Taken out July 2004, 19 years remaining
6) Interest rate is 6.59% on mortgage and loan fixed until Aug 2009
7) When fixed rate expires I go on their standard variable rate plus about 5% and I can’t remortgage elsewhere unless I pay off the loan first (property value = roughly 80K).

A friend advised me to just cash in the endowment now and use the cash to pay off some of my loan. Another told me that most of the value in endowments is gained in the last few years so I should hold onto it.

I haven’t a clue which way to go and would appreciate any advice.

Thanks

[FONT=&quot]Jon.[/FONT]

feisty1

Quote "A friend advised me to just cash in the endowment now"
Quote "unfortunately I'm financially clueless"
Quote "I haven’t a clue which way to go and would appreciate any advice"

I am sure you will receive some response to your posting, however as you're new to this board and have documented/questioned several areas of your finances that may require attention, you should be aware that what you will receive here, is the same as from yr friend OPINION.........Please don't interpret replies as advice.

However, maybe this is something you should consider....having a professional review of your full financial situation and then offering you advice..Good Luck

Gorgeous_George

With a surrender value is just £8,454 it won't make a lot of difference.

I am not a financial adviser but I would surrender the policy because I think it will not perform better during financial meltdown than it did during the nice decade.

Your mortgage is quite high and will remain so even when the fixed period ends unless you move to another lender. You need to stop spending money and get the mortgage and other debts to below the property value. The debt free wannabe (DFW) forum would be a great place to start.

GG

BigLad_2

Thanks Fesity!. And yep I do realise that this is an unmoderated forum and hence there are risks involved. Some responders may know even less than me (hard to believe but possible!)

Rest assured I'm looking only to be pointed in the right general direction and before I made any major decisions I would seek further advice.

That said I'm always a bit wary that consulting an IFA is not the whole answer either as I'm naturally skeptical they don't always give the best deal for you rather than the best deal for the both of you (considering their own commissions into the equation). That may be unfair of me and I don't enough about IFA's to judge - so maybe I should hold my skeptical tingue .

But as said I'm looking for guidance, and would not take the advice as a definitive answer and immediately act upon it.

BigLad_2

Thanks George!

dunstonh

The old Black horse life plans are not too bad (assuming it is one of those and not a TSB version). They have access to a half decent range of unit linked funds. Plus, later in their life they benefited from an increased allocation. Something that isnt usually reflected in the projections.

I wouldnt want to be in the bog standard managed fund but switching is available to utilise the rest. You can build a fair portfolio with these which was unusual for an endowment. Sadly, not many seem to utilise this unless they get to see an IFA (which most didnt as they were sold by sales reps and not advisers).

EdInvestor

Phone them up and ask for the surrender value and the latest projections of maturity values and then come back here and tell us what they say.

BigLad_2

Hi DunstonH,

Thanks for your response.

Just looked at the original paperwork and it's an old Black Horse one. I bought it from the branch. It includes Waiver of Premiun benefit & Living Cover benefit (I presume these are just a standard thing on endowments).

The premium is £43-45 monthly.

Cheers

Jon.

BigLad_2

Cheers Ed.

I'll call them on Monday and post back with the surrender value and latest projections.

Jon.

dunstonh

Just looked at the original paperwork and it's an old Black Horse one. I bought it from the branch. It includes Waiver of Premiun benefit & Living Cover benefit (I presume these are just a standard thing on endowments).

Living cover is critial illness cover. Also, being a BHL version, it will be on the old definitions (they have been reduced since then). Waiver of premium is payment protection for the endowment.

This could actually be a keeper on the basis of the cost of replacement cover and having a good fund range (which includings emerging markets, asia and latin america as choices on the fund range. Something rare with endowments). That assumes you utilise the fund choice though. I would put money on you being the default managed fund at present. Ask them to send you a funds list and switching form as well.

BigLad_2

Thanks DunstonH,

Will do as you suggest.

Cheers for the info!

Jon.