Cash in endowment or get a loan

CatieB

Any advice greatly received as I'm not wise with financial matters. Please be gentle with me this is my first post!

We have a huge scary mortgage (approx 200k) which is half on repayment and half on interest only. Since the interest rates have reduced so much we have been overpaying our mortgage by about £300pm to hopefully assist the fact we are not fully repaying.

It made me feel a little better that we did have a seperate small endowment policy already in existence. This has approx 7 years left to run and is not going to reach the amount it was meant to - taken for £68500 and now valued at £23k. Its projected value at 4% is £43k, 6% is £46.5k and 8% £52k. I have no idea what is realistic or if the amount could go down. We are told we can surrender it for £23k

We now need to find about £10k for essential home improvements. My question is should we admit defeat and cash in the endowment to release the funds or take a loan but I have no idea what is the better option. Have I provided enough info to get some guidance.

On the one hand I think it would be better to have no additional debt and keep overpaying the mortgage but then I think we may waste an opportunity with the endowment although it hasn't seemed a good investment so far.

Any help greatfully received. Thanks

dimbo61

Question 1 How are you going to repay the £100,000 interest only part of the mortgage ?
You have 2 options
1 take out a loan of £10,000 as well as the scary mortgage of £200K and pay the endowment on top
2 cash in / surrender/auction ! the endowment and pay £13K off the IO part of the mortgage and use the endowment payment plus interest saved ( smaller mortgage ) to overpay even more each month.
Use the other £10K for the essential home improvements.
I made this decision a few years ago and sold our endowment and reduced the mortgage.
Some of the endowment experts on here might have more info on the value of your endowment but they would need lots more information.
IE who is endowment with ? Type? Terminal bonus? etc

CatieB

Thanks for your reply - I don't understand types of endowments but I'm told this is not the type we can sell on but it can be surrendered by us.

If we did cash in then we would need to consider how to repay the other half, I was hoping that the overpayments would be more or less covering it at the moment. We would then pay the money not going to the endowment to the mortgage too.