Offset Mortgage and Endowment advice

simon1barnsley

I am condidering cashing in my endowment policy to and changing my mortgage to an offset one. I have 4 years to go on my endowment which is unit linked,with profits and I have been given 3 estimates of its value £32k,£35k,£37k and has a current cash in value of £25k. I currently pay in £900 in per annum to this policy but I am trying to reduce my outgoings so am looking to cash this in and change to an offset mortgage to save on interest.I would also look to add a further £5k of savings

My current mortgage is £82k of which £30k is interest only and has 15 years to run.

Any advice on this would be appreciated.
Thanks

Froggitt

So, for four years of £900, the value increases by at least £7000, ie double the contributions. Seems a no brainer to keep. Who gave you the three estimates? Or are they at say 4% 6% 8& growth? In which case even the 4% may be optimistic.

How do you work out you reduce your outgoings by cashing in? Your £30k interest only goes to repayment, which increases your monthly repayments.

My mortgage is interest only, on an offset, with endowments covering the amount owing. My main savings account is now the offset one.

getmore4less

Makes some sense, cash in the endowmwnt add 5k savings that offset the interest only bit so £900py + interest saved(less interest on savings).

eliminates the risk of any further underperformance of the endowment but surenders any upside.

dunstonh

The cost of surrender seems to be ignored here (picked up on by Froggit).

The projections are not estimates. They are example returns if those three figures were achieved each year between now and maturity. The actual return could be lower than those or higher.

At the moment, based on very very limited info, the best option seems to be keep as any alternative would have to make up £6000-11000 approx just to break even with keeping the endowment. Given the short timescale, that would be unrealistic with todays low interest rates. Maybe fund switch to something less volatile as you are getting close to maturity.