Endowment Advice Please

yotlane

Hi
Tthis is the first time I have posted on this forum, but from what I have observed someone I hope can assist with some financial advice on the following endowments that myself and other half have.

As a couple we have two endowments with Prudential (previous Scottish Amicable).

The first is due to mature in April 2016. The life insurance is for 17k and as of August 2010 has a surrender value of just over 8k, we pay £31.60 per month and their estimated payout on maturity is:
£12200 (4%)
£13400 (6%)
£14800 (8%)

This a with profits clusters! (whatever this means)

The second is due to mature in May 2016. Life insurance is £33k and at end of August 2010 the surrender value was just short of 15k. we pay £53.00 per month and their estimated payout is:

£21900 (4%)
£24200 (6%)
£26700 (8%)

Both these are currently linked to a mortgage of interest only element of 50k.

We are aware of a shortfall but oh has additional endowment, not tied to anything with Socttish Widows. The surrender value is around £9800. This is set to mature December 2016. Currently paying £30 per month with projected shortfall of just under £8k.

We want advice on wether or not to surrender these policies and just make additional payment for the mortgage and clear asap.

Our mortgage is currently £91k (50k interest only and the other as repayment). Our interest rate is 1.49% and we have 11yrs to pay this off. This rate is a deal of 0.99% above base rate for the remainder of the mortgage.

Ideally we want to pay this off in the next five years and plan to make over payment each year to accommodate this (or should we leave it in the bank as the interest rate is currently higher than our mortgage rate?)

Any advise greatly appreicated. Trying to get finances in order just in case the worst case senario of redunadancy looms.

Thanks in advance.

yotlane

Hi
Looks as if there isn't anyone that can advise?:(

lordhaldon

The reason no one wants to take the plunge is because these pages are for comments only and not advice.

However I will advise you. Do nothing until you have spoken with a good IFA. You can go to www.unbiased.co.uk and find an IFA in your area but that does not mean they are good. Ask your friends which IFA they use. Do not use a Bank or building society adviser, trust me after 22 years of working at a high level in a Bank! Finally, be prepared to pay for the advice. You are consulting a professional person and like your solicitor or accountant, they too have mortgages to pay. They may charge between £100 to £300 per hour but worth every penny and remember, all of their advice is underwritten so any comeback and they pay. It's alright Martin and the crew suggesting and promoting comparison websites for a flat fee but they cannot help a comlex situation such as yours. Maybe not what you wanted to hear but it is honest. Hope this helps.

yotlane

Many thanks for your advice, I didn't know my situation was so complex.

Happy New Year!

hebe

hi, we have considered this with our endowments too - two due to mature in 2013 and one in 2017. What we decided to do was to keep them running, as the 2013 ones are close to finishing (one with a performance promise) and the 2017 one isn't doing too badly. However, if dh were to lose his job and wasn't working again within a few months we would surrender them at that point. In the meantime we have re-mortgaged to a better rate and are overpaying on the mortgage while we can.

kyriacou_2

Is it right you need a certain percentage as a deposit when purchasing a property. I'm a first time buyer, And cant come up with what they are looking for in a deposit. Is there a way you can get a 100% mortgage or if the government can help in that scheme they were talking about?

Thanks

dunstonh

Is it right you need a certain percentage as a deposit when purchasing a property.

yes

And cant come up with what they are looking for in a deposit.

If you cant save up for a deposit then how do you expect to be able to pay a mortgage?

btw, hijacking someone elses thread is considered bad etiquette. Especially when it has nothing to do with the thread subject. Its not fair on the OP. Please start your own thread.

yotlane

dunstonh wrote: »

yes

If you cant save up for a deposit then how do you expect to be able to pay a mortgage?

btw, hijacking someone elses thread is considered bad etiquette. Especially when it has nothing to do with the thread subject. Its not fair on the OP. Please start your own thread.

Mant thanks for this

Shaun19660_1

I can't give any direct advice regarding this, but i can tell you what i have done.

I had a similar scenario with a 52k endowment mortgage and 4k and 10k equity release mortgages. I was in a 5yr fixed rate of 5.89% on all 3 mortgages with 3 yrs left to run. I fixed FOC with HSBC just before the crash (Did they know something i didn't). My endowment providor was projecting upto 20k shortfall in 2016. I couldn't sell the endowment and i had fairly high exit fees on the mortgages. I had overpaid by 20% (max allowed for fixed rate) for a number of previous years which had helped to reduce the capital owed. I didn't want to be in a postion where the endowment matured and i owed potentially 20K.

I decided to remortgage the lot (65k) on capital repayment on an offset mortgage of 5.95%. The mortgage was for 21 years (ends 2030). I surrendered the endowment for £18700, which i have now offset against the capital. I also used some of my dad's savings to offset ( i pay his interest - so he doesn't lose out, and as a result i save about 4.5% in interest payments). I also overpay, without penalty £250 every month.
With my dads savings and my own, i don't currently pay any interest to the bank. This will probably change if savings interest rates increase (as is predicted), but i think for the next couple of years i will have a big benefit.

If things really go wrong, and i have to pay the interest 5.95%, then my over payments will effectively stop and the minimum payment approx £420pm should be easily manageable. My dad can have his savings back and i should have saved a tidy sum of interest payments and reduced the amount i owe. If the interest rate stays low for the next 5-8 years, i will clear my mortgage with minimal interest costs.

I know my situation is slightly different from yours, but it may give you some ideas to think about. I personally sat on my endowment problem for too long, i wish i had surrendered or sold it sooner and used the cash to reduce the capital. You may be able to do that without incurring additional costs.

Hope this helps

Kemet

Not sure if anyone can help me, or even if I'm posting in the right area, but..........
My husband and I took out our endowment in 1985 (a few months before the formation of protection from the independent financial ombudsman). In short it looks as though we'll be just over £16,500 out of pocket when our policy matures in 2012. We have been offered compensation of £7,486 despite having written documentation claiming that the endowment would at least cover the entire £51,500 upon maturity, if not produce a bonus payment.
Does anyone have any advice on where to go from here?

ViolaLass

Kemet wrote: »

Does anyone have any advice on where to go from here?

Yes, don't hijack someone else's thread (as requested earlier in the same thread).