Cash in Endowment and pay off mortgage?

reliable65

Ok I have a unit linked Standard Life 20 year endowment-

exp date 18 july 2014 -

premium £82.72 monthly

the plan is invested in the LIFE WITH PROFITS FUND

ILLUSTRATIVE VALUES

LOW £25,500

MID £27,500

HIGH £29,500



Life cover for £36000

status of values
Value at 18 JULY 2006
Total Fund Value

12,745.36

Final Bonus

820.50

Total plan value

13565.56

Value at 18 JULY 2007
Total plan value

16179.50

Value at 18 JULY 2008
Total Fund Value

15,056.00

Final Bonus

3,124.85

Total plan value

18,180.85

Value at 18 JULY 2009
Total Fund Value

16,253.12

Final Bonus

269.51

Total plan value

16,522.63

Value at 18 JULY 2010
Total Fund Value

17,423.92

Final Bonus

2,106.96

Total plan value

19,530.88

Current Surrender Value at 08 Mar 2011
Total Fund Value

18,123.76

Final Bonus

2,786.60

Total plan value

20,910.36

I am worried as the FINAL BONUS doesnt look to be gaurenteed and could drop to a similiar value as in JULY 2009 (£269) especially as it was £3000 the previous year

I currently owe about £15,000 on my mortgage which will be paid up in JAN 2014 . I am overpaying mortgage @£440 a month paying 5.29%


IS IT WISE TO CASH THIS IN , PAY OFF MORTGAGE THEN STICK REMAING IN A NEW ISA IN APRIL 2011?

dimbo61

83 people have viewed this post and no replies!
You took out the endowment in order to repay the mortgage and you wont have any tax to pay as you have had the endowment over 10 years.
If you cashed it in you could repay the mortgage( NO ERC,s ?) and put some into ISA,s before april 5th and then use the £440 a month ( mortgage payment) to fill a cash ISA each year

Wh05apk

No-one can guess the value in 3 years time, world financial markets could crash completely, or boom, I suspect somewhere in the middle.

The final bonus cannot be guaranteed, personally I feel the markets are drifting, but not falling, in a couple of years I suspect they will be quite a bit higher than today, having stuck with it till now, I would not be throwing in the towel now.

Ultimately, it is your choice, do you take the money now, or hope to get more in 3 years time?

kingstreet

Response to PM from OP;-

One of the reasons I didn't post in your thread and in other "hold or fold" threads is because I really don't know what might happen in the future.

You've obviously thought this out very carefully so far and I'd say you have a decent grasp of the pros and cons.

As I see it, if you fold, you won't look back in a few years time and regret it as you'll have seen a definite benefit over that period.

If you hold, there is that potential for disappointment and you'll also regret the payments you've made in the interim.

Not scientific, I know, but it's probably better to look at it from the point of view of how you feel now, and how you might feel then.

I'll post this in your thread too, for others who may find themselves in the same boat.

reliable65

Thanks for the replies

Doesnt help when you read another post saying no terminal bonus was paid lol

I then go rushing to log into Standard Life to check latest figures lol

My latest working outs ( to pay mortgage off in July 2011 when they is no early repayment charges)


I was thinking maybe we would get about £25,000 when policy matures in July 2014 ( although gaurenteed amount would be around £21,500 )


However if I take the £21,000 now

I would pay off mortgage at approx £14000

which would mean leave me with £7000 plus the following


37 months @ £83 endowment - finishes july 2014
33 months @ £429.00 mortgage (overpaying mortgage andpaying @5.29%) - finishes feb 2014 if continue paying £429

ALL THE ABOVE ADD UP TO

£7000 + £3071 + £14586 = £24657


The thing that has got me worried is when the BONUS on the endowment dropped from £3100 to £300 in JULY 08

I would be gutted if this happened again thats why i am considering cashing in now



Still unsure what to do

dunstonh

Doesnt help when you read another post saying no terminal bonus was paid lol

Was that a Standard Life thread? Was it the same version of endowment you have? (Std had several versions over the years) Was it the same target growth rate as yours?

What is the mortgage endowment promise value on your plan?

reliable65

No it wasnt a Standard Life thread and i wasnt comparing - like i say just gets your mind thinking again lol

Mine is called a HOMEPLAN

It doesnt say anything about a mortgage endowment promise value when i log into my account on standard life - do i have to call them to ask them about this?



It just gives

Total Fund Value and Bonus

dunstonh

It doesnt say anything about a mortgage endowment promise value when i log into my account on standard life - do i have to call them to ask them about this?

Yes. It wont appear online.

reliable65

just looking at july 2010 statement and it says

Shortly after the MEP was introduced in 2000, we reviewed each house purchase plan to which the MEP applied.

If the result of this view showed that the plan was at that time projected not to pay out its target amount, even if the future earnings from then until maturity of the plan on the assets in which the plan was invested were on average 6% each year (after tax), the plan was eligible, subject to the conditions of the MEP, to have a top-up payment added at maturity to reduce the impact of the maturity value falling short of the target amount.

If the result of the review showed that the plan was at that time projected to pay out its target amount or more, assuming that the future earnings from then until maturity of the plan on the assets in which the plan was invested were on average 6% each year (after tax), the plan was not projected to need a top-up payment at maturity. The holder of such a plan is categorised as a "MEP Non Top-Up Planholder".

If your annual review statement has directed you to this website page you are a "MEP Non Top-Up Planholder". What this means is that, if the 6% a year test is not met, you will not receive any payment under the MEP. However, if the 6% a year test is met, and at the same time the maturity value of your plan is less than its target amount, it is possible that, subject to the conditions of the MEP, you could receive a payment under the MEP.

IT IS UNLIKELY THAT YOU WILL RECEIVE ANY MEP PAYMENT




I will call later this arvo see what they say - is there anything else i need to ask?

reliable65

Just called Standard Life and there is no MEP on my endowment !!!!

hcb42

Personally I would cash it in and start saving the monthly payment for the mortgage and the policy itself and have the peace of mind that mortgage is gone, but that's my own personal view and probably reflects my attitude to the risk.