Scottish Amicable endowment - to surrender or not?

Gillingham

I posted some of this information on another thread but I haven't had any replies to I'm trying a new thread and coyping over some of the info. I posted.

I have two SA homebuyer policies. One is for £16,500 and was taken out in August 1886 and the other is for £13,500 taken out in May 1989. The first one was over 25 years and matures in August 2011. The second one was for 22 years and matures in May 2011. This was done when we moved house so the mortgage would be finished in the same year.

Date of Maturity 11/08/2011 (£16,500) - £10,858.54 as at 31/12/09 (new declared bonus was £120.41)
Date of Maturity 11/05/2011 (£13,500) - £8,507.88 as at 31/12/09 (new declared bonus was £89.42)

As you can this is really poor. I am paying £24.10 per month on the £16,500 policy and £24.62 on the £13,500 policy. Am I just pouring money into a bottomless pit?

I am one of the lucky people who dropped onto the base variable rate when my fixed rate ended last year. I am currently paying my interest only mortage at a rate of 2.5%, hence I am paying an extra £240 a month to try and help with the shortfall. I also borrowed an extra £10,000 in October 1999 when I moved again. This was put on a repayment plan and I have now paid this off.

It's the terminal bonus bit I don't understand. £19366.42 is a bit scary when you consider I still have to pay £289.20 and £221.58 into the policies in view of the poor bonus declared.

The figures on the 'conventional with-profits statement' seem to bear no resemblence to the mortgage endowment plan update which we received last month. The total shortfall shown there for both plans is £3,800 @ 4%, £3,300 @ 6% and £2,800 @ 8%. However these figures look ridiculous in the light of the recent bonus paid.

Any help would be much appreciated. I am having to deal with these matters as my husband is very unwell at the moment. To be honest, I think he has been burying his head in the sand about this.

Gillingham

I have just contacted the Pru (first time in all the years I have had the poicies).

The values seem to be dropping faster than a stone. The previous values quoted were from June and a month later they have dropped to:

14,800 @ 4% 15,100 @ 6% 15,400 @ 8%
11,300 @ 4% 11,400 @ 6% 11,600 @ 8%

as they say 6% is the most likely outcome this means a drop of £200 since last month.

The customer service representative quoted a surrender value of £14,075 (against the £16,500 policy) and £10,783 (against the £13,500 policy). This is a total of £24,858. She was somewhat vague as to whether there would be any charges to come out of this amount.

This is £1642 less than the projection (at 6%) should I wait until maturity. As I will be paying £289.20 and £221.28 in endowment premiums and £59.72 a month mortgage (£597.20)until May and then a lesser amount (after the smaller policy pays out) until August 2011, it would seem I might be better off cashing these policies in now. As of today my mortgage stands at £24,955.

Gillingham

Gillingham

Help!

I haven't received any comments on my posts re my Scottish Amicable Endowment policies. Perhaps all the knowledgeable people are on holiday!

I have received my surrender information today from the Pru. The figures are as previously quoted:

£14,075 (against a £16,500 policy due to mature on 11/08/2011) and £10,783 (against a £13,500 policy due to mature on 11/05/2011)

There is no mention as to whether there will be any charges or fees to come out of this amount.

I am very tempted to surrender the policies as the above amounts would give me almost enough to pay off my remaining mortage. I have paid over £5,000 off the original amount of £30,000 as I knew there would be a shortfall.

Any help would be very much appreciated. Please! Even an opinion.

Thanks.:rotfl:

Bettie

I was hoping you would get some input to your post as you are not in a dissimilar boat to me and I haven't a clue what to do after reading it may pay to cash in now before it drops further.
I am also ending in August 2011 and borrowed £28350, total Bonus and Benefits £18,830.95 as at 31/12/2009 and £209.46 new declared bonus.
I am thinking I am 9519.05 short and one year to go, if the bonus paid the same I would have to have a terminal bonus of about £9300 to pay off my debt. I have no idea if this is the sort of figure they pay. I will pay another £491 into the pot by the final day. mmmmm
It is a bit of a gamble. I reckon if they offered me £25000 now I might take it unless someone here advises not to with good reasons.
I guess I won't know unless I ring them.

Gillingham

I am glad somebody is reading my posts, thanks!

Are your policies with Scottish Amicable? I have to admit I was more than suprised at the surrender values they quoted.

The terminal bonus is quoted at 35% and 37% for my two policies. I will happily surrender the policies as long as there are no MVR's or charges to pay. If I get a total of £24,858 I will be a very happy lady as this will almost pay my mortgage off. As I said previously I have known there would be a shortfall and have managed to pay over £5000 to help cover this.

The thought of being mortgage free is very appealing! However, I still feel like I am a victim of !!!!!! Turpin! :j

Gillingham

Bettie,

I have just done a quick calculation and would guess your bonus to be £6968 (calculated at 37%). This is still going to leave you pretty short of your target amount. i am not a financial person, just a housewife who is having to learn about this topic very quickly! Getting any answers is proving difficult. I went into the building society and spoke to an advisor. The only thing he could suggest was waiting to see what the final values were, and if we were short he said they could extend our term or perhaps give us a loan. The fact that I've paid over £5000 off the mortgage seemed to go over his head!

Why we we so young and naive! We were just gratefull somebody would give us a mortgage! It was only three years afterwards that we found out that we hadn't actually bought our policy off the Abbey National, just some guy who worked for Scot. Am who got his bum on a seat in one of their offices! In fact, it was when we moved over to Nationwide and they sold us a policy (Scot. Am again). At least he told us he was an independent financial advisor. The following month Nationwide went over solely to selling Friends Provident endowments. :mad:

slummymummyof3

In a similar position to you guys but with Friends Provident policy which is pitiful! Also a Pearl policy which is marginally better (well, last time we looked anyway!!) We have 6 years left to go on the mortgage and are overpaying as much as possible to cope with our projected shortfall of £18k which is very scary!!

Bettie

Gillingham wrote: »

Bettie,

I have just done a quick calculation and would guess your bonus to be £6968 (calculated at 37%). This is still going to leave you pretty short of your target amount. i am not a financial person, just a housewife who is having to learn about this topic very quickly! Getting any answers is proving difficult. I went into the building society and spoke to an advisor. The only thing he could suggest was waiting to see what the final values were, and if we were short he said they could extend our term or perhaps give us a loan. The fact that I've paid over £5000 off the mortgage seemed to go over his head!

Why we we so young and naive! We were just gratefull somebody would give us a mortgage! It was only three years afterwards that we found out that we hadn't actually bought our policy off the Abbey National, just some guy who worked for Scot. Am who got his bum on a seat in one of their offices! In fact, it was when we moved over to Nationwide and they sold us a policy (Scot. Am again). At least he told us he was an independent financial advisor. The following month Nationwide went over solely to selling Friends Provident endowments. :mad:

Yes I am with Scottish Amicable and was young and naive once too! I believed when this policy finished I would receive the full amount and approx £66,000 extra! I was going to retire early and live a life of luxury as that was an enormous amount of money back then. I bought the policy through an independant that I believed was Nationwide too but I didn't know that back then. We have a lot in common! ( Not from Bristol are you?)
Thanks for the estimate. I may ring them tomorrow, I have paid off a few thousand and saved a few thousand as I didn't want to be caught short but that's not the point, is it.:(.

Gillingham

No, I'm not from Bristol, I'm from Sunderland. Greedy (not to mention, less than honest) financial advisors were all over at that time. On our first policy we were told it would pay the mortgage, £16,500 and give us over £20,000 extra. We had visions of taking a round the world cruise etc. etc. A week at Blackpool is looking good at the moment! There was never once any mention that the policy could fail to pay off the mortgage. That is why we were quite happy to have another endowment three years later when we moved. I do remember the guy trying to tell us that we would be better off ditching the first policy and taking out a new one for £30,000 over 25 years. I must have learned something because I told him we just wanted another policy for £13,500 over 22 years so that the policies would mature in the same year and pay the mortgage off. He backed off when I stood my ground, but he still never told us that the policy might not cover the mortgage!

Let us know how you get on with your surrender values. Don't forget to aslo ask them for a valuation at the time you call. I was shocked to find our valuation had dropped £200 in one month! You need to have your policy details to hand when you telephone. The bad news is that the call centre is in India, so getting your point across might not be too easy. The Geordie accent (even my posh one) doesn't seem to go down too well in Mumbai. You do get the written valuation and surrender values in a few days though.

Good luck! :T

Gillingham

I have just spoken to the Pru who have told me the surrender values they gave me are not guaranteed until they actually send you the surrender forms. The values are then guaranteed for 30 days so I have asked for the surrender forms to be sent They have told me there will be no further charges and the amounts shown are what I will receive. Apparantly the letter I got was a 'quotation' only. I just hope the values don't drop before I get the surrender forms!

When we took out our second endowment in 1989 it was assigned to the Nationwide. I have no recollection of this. As we moved again in 1998 (and the mortgage was reedeemed at that time) we have to get a 'letter of no further interest' from Nationwide before we can surrender that policy. The original policy doesn't have any such assignation and the proceeds can be paid directly to us. Nationwide have said they will get that letter sent directly to the Pru which should speed things up.

If anyone reading this is thinking of surrendering their policies it is best to have your mortgage account number when you phone the Pru as they only had our previous account number on their files.

Bettie

Gillingham wrote: »

I have just spoken to the Pru who have told me the surrender values they gave me are not guaranteed until they actually send you the surrender forms. The values are then guaranteed for 30 days so I have asked for the surrender forms to be sent They have told me there will be no further charges and the amounts shown are what I will receive. Apparantly the letter I got was a 'quotation' only. I just hope the values don't drop before I get the surrender forms!

When we took out our second endowment in 1989 it was assigned to the Nationwide. I have no recollection of this. As we moved again in 1998 (and the mortgage was reedeemed at that time) we have to get a 'letter of no further interest' from Nationwide before we can surrender that policy. The original policy doesn't have any such assignation and the proceeds can be paid directly to us. Nationwide have said they will get that letter sent directly to the Pru which should speed things up.

If anyone reading this is thinking of surrendering their policies it is best to have your mortgage account number when you phone the Pru as they only had our previous account number on their files.

Wondering if it would be worth cashing in the endowment and putting it somewhere, like a year fixed rate earning more than 2.5%?? or do you _have_ to pay off the mortgage with it straight away?