Sell endowment or use savings?

Shoose

Hi

We are currently in the process of extending our house. We are mortgage free, have savings in ISAs and an endowment policy.

The question is - do we cash in the endowment policy or use our ISA savings to fund the build, or maybe get out a loan and keep the savings?

The Endowment was taken out with a mortgage in 1991 but has been used as savings plan since 1995 (we changd to a repayment mortgage and paid of the balance a few years ago).

Endowment details:
Prudential (ex Scottish amicable) with profits endowment, 10 with profits clusters
£45.90 per month
Started Dec91, matures Dec 2016.
As at 6Jan2010:
Surrender value £15 388
Claim value on Death £37 500
Loan value £8 665
Paid up value £11 140
Projected values assuming premiums paid:
£24 400 4% return
£27 600 6% return
£31 100 8% return

In our cash ISAs we have £19k with the Halifax.

Alternatively we could keep both and take out some sort of loan, but then why pay interest on the loan when we have money in the bank? We are going round in circles trying to decide on the best course of action!

Any advice much appreciated.

EdInvestor

If you took out a loan for the extension, what interest rate would you have to pay?

What return are you getting on your ISA and endowment savings?

Shoose

Hi

The ISA is a Halifax ISA Direct reward paying 3% interest.

I'll need to dig out the last endowment statement.

xxdeebeexx

Check how much it will cost for Life Cover before cashing in the Endowment..........
Just a thought

Dx

opinions4u

I'd make sure that you've got enough in a contingency fund (3-6 months wages) and fund the rest from the savings / endowment, making sure that you have adequate life cover before cashing in the endowment.

If you choose to keep the endowment, you could use it to back an interest only mortgage again, so it could keep the cost (monthly payments) of borrowing down.