pru endowment

shane42

i would like some advice please
i have a prudential endowment policy
start date june 1996 matures june 2021
it is now after many years worth more than what i have paid in (just)
last year was actually the best year the total with profits value at dec 2008 was £1000 more than the year before but the unit linked value only went up £22

ok so the surrender value today is£10,112
the premium is £52.50 pcm

is it likely to keep doing well or should i bank? i would put the money towards a BTL

apparently a porportion of the bonus has been allocated to the surrender value with the rest being added in march/april
is it worth waiting till then?

total with profits value at dec 08 was £5,894
total unit linked value dec 08 was £1,522

the split is 80% with profits
20 % unit linked

any help please

EdInvestor

Please post the maturity projections (you will have to ring up and ask).

What rate of return would you expect to get on the money if you cashed in and banked it?What rate of interest would you expect to pay on your BTL mortgage?

shane42

btl best figures 6% gross rental yield
rent = £550
purchase price approx£110,000

paying 4.25% interest on mortgage for two years fixed

cash in bank 2-3 % i guess not sure (thinking of putting £5100 in to LTSB ISA )3.1 %) with bonus

projections

4% = £24,200

6% = £29,000

8% = £34,800


many thanks

EdInvestor

shane42 wrote: »

4% = £24,200
6% = £29,000
8% = £34,800

If you cashed the policy in now and took out a BTL mortgage @4.25% using the lump sum to reduce the amount borrowed, your return at maturity would be equivalent to £24,872.That's with no risk.The risk premium has much diminished in recent years.

If instead you put the money in the bank @3%, the return would be £22,275, again at no risk.

You might get 6% out of the Pru. So I'd suggest when you are ready to borrow for the BTL, you dump the policy and use it to reduce the amount of the mortgage.Until then, might as well stick with the endowment,no real advantage in the savings route at current low rates.

shane42

EdInvester

thanks very much for your help very helpfull indeed.

shane