Another request for advice on endowments

Ginky2

We currently have three endowment policies which we need to review on a case by case basis to decide what we should do with each one - surrender, sell or continue with. If we do sell/surrender the aim would be to pay all the proceeds off the mortgage, then use all the saved premium cash to make overpayments on the new mortgage amount. The life insurance element is not required.

Current mortgage is in three parts

£120,000 interest only at 4.99% to end April then 2.5% (BOE plus 2% for life)
£71,000 approx repayment at 4.99% to end April then 2.5% (BOE plus 2% for life)
£45,000 approx repayment at 1.25% (BOE plus 0.75% for life)

Endowment details:

Royal Life Homebuilders Plan with profits fund (now Phoenix)
Target £52500
Maturity date 28/09/2012
Monthly premium £84.90
Guaranteed sum assured £16065
Declared bonuses 31/12/07 (latest statement) £12185.26
Surrender value 4/2/09 £28,232
Maturity projections
4% £34600
5% £35800
6% £37000

Guardian Royal Exchange Low Start Homebuilder
Target £6080
Maturity date 6/10/2012
Monthly premium £11.04
Declared bonuses 6/10/07 (latest statement) £3270
Surrender value 6/10/08 £2793
Maturity projections
4% £3410
6% £3650
8% £3910


Sun Life of Canada Low Cost Endowment Plan
Target £67650
Maturity date 28/2/2013
Monthly premium £111.70
Guaranteed sum assured £27331 (at 27/2/09)
Declared bonuses £17331 (at 27/2/09)
Surrender value £36345.48 (at 27/2/09)
Maturity projections at 8/11/2007 – latest statement
4% £58300
5% £61000
6% £64200

The decision is complicated slightly further as we also have £75000 we want to pay off the mortgage as the result of a recent CI claim (nice problem to have with the cash but would rather have acquired it a different route!) We will also continue to make large overpayments each month – ie haven’t, and don’t intend to reduce our monthly mortgage payments when interest rates fall and if the mortgage owed falls as a result of cashing in the endowments, hopefully to give ourselves a good "cushion" should we need it.

Any advice from experienced money savers on best way forward with the policies, and which part/s of the mortgage we should pay off would be greatly appreciated and if there is any more information you need in order to reply please just ask!

Thanks in advance from a confused newbie, mortgage free wannabe

EdInvestor

With interest rates so low, now is not really the time to be cashing in endowments, though your strategy is sensible.Look at the position again when rates creep up to around the 4-5% level.