will I do better to surrender my endowment and invest in a fixed rate bond

battelaxe

My prudential unit linked endowment has consistently underperformed, and now will not repay my mortgage on maturity in 2016.

I wonder if there would be any complication if I surrendered it and invested in a fixed rate bond that returns 4.65%. The return will be greater if I do convert to the bond.

I am almost sure of having a shortfall whatever I do. Will I have trouble remortgaging for the uncovered shortfall (i reckon about £15000), or are lenders usually happy to roll over the remainder.

Secondly, I will reach the age of 59 in 2016, which may limit the term of any new loan.

I only have a part time job with tax credits, so does this cause me extra difficulties?

Any ideas?

dunstonh

My prudential unit linked endowment has consistently underperformed, and now will not repay my mortgage on maturity in 2016.

That would be unusual. Until the recent global recession, none of Pru (original) endowments had fallen short and only around 10% of Pru (scot Am) had prior to that.

I wonder if there would be any complication if I surrendered it and invested in a fixed rate bond that returns 4.65%. The return will be greater if I do convert to the bond.

You assume it will do better. However, 4.65% gross is lower than their recent returns on the endowment.

I am almost sure of having a shortfall whatever I do. Will I have trouble remortgaging for the uncovered shortfall (i reckon about £15000), or are lenders usually happy to roll over the remainder.

Most lenders would expect you to do something to reduce shortfall as you get closer to the end. However, they will usually let the shortfall amount rollover for a couple of years as long as you are still working.

I only have a part time job with tax credits, so does this cause me extra difficulties?

Only if you have means tested benefits.

battelaxe

I must be one of the unlucky ones. I took out this turkey in 1991 to cover a £49000 mortgage, it has cost me nearly £104 pcm premiums. 20 years x 12 months x £104 = 24960.

The policy is currently worth £26,147.78. Even without any interest it barely covers the investment, and managers get paid for doing this!

My endowment is unit linked which might explain why your figures differ, it was also a Scot Am transfer.

Having read the extra info, is it still your opinion that I should sit tight?

Thank you for your help.