What to do with rubbish endowment

Frith

Hi there.

I bought my house in 1999 for £43,500 and have been paying the interest off on the mortgage ever since.

Due to many problems to boring to go into here, I have not been paying the endowment. I just had a statement and it is worth £6264.22 - probably less than I paid into it - and is losing me £256 a year in admin fees!

What I want to know is - what should I do with it? I'm not really in a position to throw more money into it.

I still have £43,500 to pay off on the house. I have a second mortgage that has about £8,900 left. No other debts at all (thanks largely to this site!)

Ultimately I would like to move house but I am tied in to an order that I have the house until my sons are 18 or until I rent it out or sell it (this agreed in the divorce). At that point I have to pay ex-husband his share which is about £15,000.

So £6264 isn't really enough to clear the smaller 2nd mortgage or pay off the ex-husband. I don't like to think of it losing money though.

Any ideas?

hcb42

How are you going to pay off the mortgage?

Personally, I would cash it in, reduce the mortgage, and make the payments repayment not interest only.

Thrugelmir

Use the endowment proceeds to reduce your mortgage now.

As has been suggested already. Start paying capital off the mortgage.

At the moment you are doing little than renting the property.

dunstonh

and is losing me £256 a year in admin fees!

Thats a unusual way of looking at investments. Its a bit like having a savings account and saying that its losing you 1.3% a year because of the net interest margin.

What I want to know is - what should I do with it?

You havent told us anything about it. Give us the details.

kingstreet

Is the policy just in your name?

If ownership wasn't resolved, your ex-husband may be entitled to part of the proceeds.

Frith

Yes, the policy is in my name.

I presumed I couldn't get a different mortgage because I haven't got a job? That is why I can only afford to pay the interest at the moment.

Frith

dunstonh wrote: »

Thats a unusual way of looking at investments. Its a bit like having a savings account and saying that its losing you 1.3% a year because of the net interest margin.


It's not really an unusual way of looking at it. The statement says "Units to the value of £0.00 were allocated to your policy during the last 12 months".

"Units to the value of £256.12 were deducted from your policy during the last 12 months to cover the protection your policy provides and the costs of servicing your policy".

So the total is slightly smaller than last year. It is losing me money.

handytips

Cash it in, i would.

dunstonh

"Units to the value of £256.12 were deducted from your policy during the last 12 months to cover the protection your policy provides and the costs of servicing your policy".

So the total is slightly smaller than last year. It is losing me money.

That illogical.

Do you want 7% after charges or 5% with no explicit charges?

You get charged on a savings account implicitly so you lose money on cash savings using your argument.

Cash it in, i would.

Really? And what analysis have you done to suggest that is the best option? We don't even know who its with, what the terms are and if it has an MEP or not.

So, with the complete lack of facts, you are advising that a surrender takes place.