Endowment: should I cash it in now?

garethshaw

I have a Santander endowment. The details are:

Original target amount £45,000, scheduled to mature in June 2018.

Predicted maturity values (at 4%, 6%, 8% growth per year respectively):

Projected final amount quoted in 2011- £30,200 £36,000 £42,900
Projected final amount quoted in 2012- £29,600 £33,000 £37,200

Outstanding mortgage balance the endowment needs to cover: £25,000

Current surrender value: £ 20,500

Remaining payments: £100/month (£30 interest, £70 endowment)

6 years left to pay: 6 x 12 x £100 = £7200
Obviously this will vary should interest rates change. My mortgage is a tracker: BoE rate + 0.59%)

Options are:
1. Keep paying for it and hope that the maturity value is at the high end of the estimate;
2. Surrender now, become mortgage free and save the monthly payments (I am aware that I'd also loose the life assurance that comes with an endowment, but that's not a major concern).

What are people's opinions?

Thanks

DVardysShadow

Is there a guarantee associated that the policy will clear the mortgage? That may be worth more than the endowment itself.

garethshaw

The endowment is on track to give me the £25K I need to pay off the mortgage.

I suppose the real question is: Is it likely to return a figure in line with the 8% forecast (so giving me surplus of about £12K) or the 4% forecast (so giving me surplus of about £4K)?

opinions4u

garethshaw wrote: »

I suppose the real question is: Is it likely to return a figure in line with the 8% forecast (so giving me surplus of about £12K) or the 4% forecast (so giving me surplus of about £4K)?

It's not a forecast. It's a regulatory projection. The future return can be less than 4% or more than 8% or anywhere in the middle.

Nobody can give you an answer to your question without a time machine.