Explain Endowment Surrender pls?

madmittens

Hope you kind people can help a dummy please!

Background - I have an IO mortgage, backed up with an endowment policy. Having received warnings about the endowment under-performance, over the last couple of years I've paid a large proportion of my mortgage off - just over 11k left. However things are a bit ropey on the job front at the moment and I'm trying to find a way to clear the remainder as soon as possible (15 years left).

Would surrendering my endowment be a way forward to clear mortgage (and save the endowment cost every month)? My latest statement two weeks ago shows its value as £11,949.25 (units x price), is this the same as the surrender value? Do I just ring the provider and ask? Would I have to pay tax on the payout? Any pitfalls?

Any advice appreciated please...

dunstonh

Would surrendering my endowment be a way forward to clear mortgage (and save the endowment cost every month)?

Its certainly an option but its not possible to say if its the best option.

My latest statement two weeks ago shows its value as £11,949.25 (units x price), is this the same as the surrender value?

Current value and surrender value are two different things. They can have the same value but you need to check both.

Do I just ring the provider and ask?

yes

Would I have to pay tax on the payout?

If the plan has yet to qualify then potentially yes. If it has qualified then no. Easiest qualification to meet is that it has done more than 10 years.

Any pitfalls?

yes. a) loss of life cover b) endowment isnt as bad as you think and could be good c) loss of guarantees (some providers have guarantees or add on payments at maturity which are lost on surrender).