Endowment - sell or retain?

kmac99

New to this forum, so would appreciate any advice. My mortgage of £50000 comprises £36000 on endowment, and £14000 on repayment. The endowment is with Friends Provident and has 9 years to run, as has the mortgage. The endowment is currently worth approximately £11000, and at term will probably only realise around £20000 (best case scenario).

My question is should I cash in the endowment now (paying £49 pcm) and convert the mortgage fully to repayment, using money from endowment to reduce amount of mortgage debt? Only other way I can see to make up shortfall is to save money every month, and I don't think I am disciplined enough to do this. Also cannot afford to make addtional payments on full repayment mortgage and continue to pay into endowment.

Anyone have any experience of this ?

EdInvestor

Another way of solving a shortfall problem is to surrender the endowment, and use the money to reduce the size of the interest-only part of the mortgage, then overpay that i/o mortgage with the endowment premium.

This way you retain flexibility as you can stop overpaying temporarily if something goes wrong, and also have some leeway on the interest rate side - hopefully they will come down again later.

A further possibility is turning the I/O mortgage into an offset one and using the endowment surrender value as the cash offset, and the endowment premiums to pay the reduced interest. This probably wouldn;t help so much with the shortfall, but is another way of giving flexinility.

Be sure to replace the life cover before surrendering if you need it.

dunstonh

Most FP endowments have access to the unit linked fund range at an annual management charge of 0.70%. It may be a fund switch is all that is required to exceed the "best" scenario.