Should I cash in my Mortgage Endowment

MAXlMUS

Hi Guys,

I purchased my house in 1991 with the dreaded endowment mortgage. Obviously the endowment(no profit) has a massive shortfall so instead of increasing the payments I have been gradually chopping away at the mortgage capital.

Basically I have 4 years to run with the following figures :

Mortgage remaining £23700
Endowment Surrender Value £14900

I was thinking of cashing the endowment in and reducing the mortgage capital bring it to £8800 saving me about £25 in monthly mortgage repayments plus £54 monthly in endowment payments a approx saving of £3792 over the last 4 years.

Can anyone see and disadvantages taking this route?

Cheers

Mark

McKneff

Dont forget that you have life insurance while the endowment is running, would you circs mean that you would have to take this out seperately.

There should, hopefully, be a terminal bonus too.

Just my tuppence worth.

The experts will be along later to help.

MAXlMUS

I understand the life insurance would need sorting....I rang the Endowment company today and they assured me there this policy is not "with profits"...is this the same as a terminal bonus?

One other thing I found strange,,,the advisor on the end of the phone almost seemed to be urging me to surrender the policy...strange?

Thanks

Mark

kingstreet

MAXlMUS wrote: »

I understand the life insurance would need sorting....I rang the Endowment company today and they assured me there this policy is not "with profits"...is this the same as a terminal bonus?

Terminal bonus is a feature of a with profit policy as it reflects profits earned over the term of the plan which haven't been distributed as an annual bonus. Think of it as your share of the fund put on one side to cover bad investment years.

If the policy isn't with profits, it is unit-linked. Your contributions buy units in a particular investment fund and the growth of the price of units reflects the profits earned by the fund. There would be no terminal bonus for such a plan as nothing is put aside "for a rainy day" so to speak.

The decision to surrender can only be taken by you and should be based on how you feel the plan might perform over the next few years.