surrender or keep endowment

jad70

Hello All,

First time on here and trying to get some initial advise. I have an endowment which has been running since 1993, and approximate monthly premium of £70 with a target amount of 60K. Current predictions from Aviva are (worst case at 4%) 36.6K in 2018.
I do not have a house yet but the 23K surrender value would sure be handy to have as a deposit. By my calculations I have paid in just over 15K, so 8K up.

Is it worth surrendering or selling?

Thanks in advance

J

dunstonh

Current predictions from Aviva are (worst case at 4%) 36.6K in 2018.

They are not predictions. They are examples.

I do not have a house yet but the 23K surrender value would sure be handy to have as a deposit. By my calculations I have paid in just over 15K, so 8K up.

Or alterantively, it can be used to shorten the term and therefore cost you less money in the long run.

Is it worth surrendering or selling?

What is the mortgage endowment promise value?
What is the 6% projection (which is probably more realistic)?
What is the current value/position (not surrender value as you have mentioned that)?

jad70

dunstonh wrote: »

They are not predictions. They are examples.



Or alterantively, it can be used to shorten the term and therefore cost you less money in the long run.



What is the mortgage endowment promise value?
What is the 6% projection (which is probably more realistic)?
What is the current value/position (not surrender value as you have mentioned that)?

Unfortunately I dont know the MEP, but in the Jan 2011 shortfall letter there is a maximum promise of 9.4K.
The 6% projected final amount is 41K
Current value as of Jan 2011 was 32K

I take it when you say 'shorten the term' you mean the morgage I will be taking out will be shortened if I run the policy to term and pump the money into that mortgage?

dunstonh

Unfortunately I dont know the MEP, but in the Jan 2011 shortfall letter there is a maximum promise of 9.4K.

The MEP is the promise value. So, based on that, your MEP appears to be £9400. So, you should add that on to the example projections.

I take it when you say 'shorten the term' you mean the morgage I will be taking out will be shortened if I run the policy to term and pump the money into that mortgage?

If you take the mid rate projection plus MEP, then thats around £50k. You could have the first 50k of your mortgage on interest only with an expiry date of 2018. The rest you borrow can be on repayment basis with a longer term.

so, when viewed over the long term, the ability to get rid of £50k of your mortgage within 7 years of starting it must be attractive.

jad70

Thanks for that dunstonh. Kind of does make sense, but also handy to have the cash now if you know what I mean.

Thanks again.

J

Loup11

This is interesting as I want to cash in my endowment policy. I have been told that it works out better to sell it rather than surrender it but I'm having real trouble finding a company which buys endowment policies. Any advice?

Thanks.

LP