Endowment shortfall choices?

rosegirl36

EdInvestor wrote: »

I wouldn't do anything at the moment.A unit linked policy will bounce back when the markets recover, there is no point in cashing it in now when its value is low.Equally the return if you used the money to repay part of the mortgage would be low as you are only paying 3% interest.

I was'nt planning on cashing in the policy, just converting £13000 of the interest only to repayment to ensure the mortgage will be paid off in full.Regarding the markets recovering, will they recover sufficiently in 11 years to reach the endowment target?

Trying_to_be_good

No-one can know. If certainty is important, I'd be converting the £13,000 to repayment so I'd KNOW it will be paid off, and overpaying more still in case the endowment shortfall is closer to the 4% growth estimate.

dunstonh

keeping the endowment running (as its unit linked and has good potential for a bounce) and planning to cover the mid rate shortfall just in case would be very sensible. If the endowment doesnt bounce back then you have covered it. If it does bounce back you get a lump sum in your pocket.

EdInvestor

rosegirl36 wrote: »

Can anyone advise me on the best option to deal with the shortfall?

In many cases (though not yours) the best option will be to surrender the endowment, use the lump sum to reduce the mortgage, and increase the mortgage payment by the amount of the redundant endowment premium, thus overpaying the remaining mortgage.

rosegirl36

Thanks guys for all the input, i am really gratefull, i think i will proceed by asking IF to convert £13000 of interest only to repayment to "cover" the endowment and hope for a "bounce in the markets as a nice bonus.