Another Endowment Dilemma

brucefan1962

Please could you let me have your thoughts on what I should do with my endowment. It's with Legal and General, due to mature 11/11/2012

It's on red alert, in August 08 projection at 4% was £24900, now £20800

Surrender value at present £16883.80
Payments are £39.50
Basic Sum assured £9471
Bonus £7277.10

We have 25,000 on interest only mortgage, am worried as nearing end of term and don't want a massive shortfall.

Any ideas welcome,
Thanks

brucefan1962

anybody??

Please??

theartfullodger

My advice is, 4wot-it's-worth,,.....

a) Keep paying the monthly payments to the end of the term... probably one of the better bets to for you to recover any money from the deal. Surrendering/selling it will PROBABLY lose more money, but there are no guarantees with anything re. money - even £10notes under the bed have risks.. (Some things go up in value, some down.. sorry but that's what happens... )
- btw is having any life cover in case you drop dead between now & Armistice day 2012 of any value to you??
b) Unless stock-market etc. recovers between now & Armistice day 2012 there will be significant shortfall - looks like about £4.2k (I know I'm stating the obvious) so start saving now... sounds to me like about another £100/month... to have that much - £4.2k - by then.
c) Unless the mortgage company will extend your interest only - is the repayment rate nice 'n cheap>>??
d) Or, assuming you are not young like me (I'm 61) figure if a bit of equity release in November 2012 will give you the breathing space you need..
e) Earn more somehow (eg rent-a-room)

Just a few ideas off 'top of my head..

Good luck!! Sorry but I think most of us have been significantly burned by the financial fiasco over the past 12months or so (personally I'm down much more than £4.2k... any ideas??)

Cheers!

Lodger

brucefan1962

Thanks Lodger.

Yes, equity realease is a solution, and I realise others will be harder hit, I just don't understand finances very well and am reluctant to keep paying £40 per month if it's not going to cover mortgage at end of it.

castle96

most TEP's are not even quoting now (for sale of endowments). Terminal bonus rates are declining dramaically. Sell or keep/paying ???????? You look at your end of year statement and (for me) £61 p/mth premium... £207 reversionary bonus earned (pa), surrender value declines (£2000 over 3 mths)... you can only hope, or, cut your losses and invest elsewhere at ?%... What a dilema.

DO current surrender values include "a proportion of terminal bonuses" I have this phrase in a L&G surrender quote, but SURELY (can't get them to confirm either way now !), terminal bonuses are ONLY payable at MATURITY, so how can they include a % of them in a surrender quotation ?

dunstonh

Endowments are not liquid investments and liquidity is important at the moment. Hence why TEPs have dropped off.

Final bonuses accrue as you go on and you will get a final bonus accrued to date on early surrender. However, there could (and probably would) be a penalty applied to it. Especially on conventional with profits plans which the OP has.