relinking endowment to mortgage

Seamonsters

I have a 23yr mortgage with The Woolwich for £72000 on my house valued at £144000 and am now thinking about converting the loft (should cost at least £25000).
I have an endowment policy that is at £10000 at the moment and has 13 years left to reach a target of £32000. I am currently using this for savings and was wondering if it was wise/possible to take out an interest only part of the mortgage linked to this to cover the loft costs.

Any advice ?

dunstonh

You can link it if you like. Nothing formal needs to be done. You just take out an interest only further advance for the amount that the endowment is likely to pay.

It may be worth getting the endowment reviewed though. Whilst companies like Pru, NU, Std Life and unit linked endowments should be more or less ok going forward, others can be quite dire and you could end up throwing good many after bad by keeping it going.

Seamonsters

Thanks for the quick reply dunstonh.
Assuming the endowments doing ok, do I just contact The Woolwich about this (I never noticed anything on their web site about interest only mortgages) or do I have to remortgage. Sorry I know this must sound like a stupid question:o

dunstonh

If you are going to use your existing lender, you just approach them aobut a further advance. It wont be a remortgage (unless you change lender at the same time).

They issue mortages in capital and repayment basis or interest only basis. That doesnt impact on the deals that are available.

Seamonsters

Thanks. Can you tell from these details if my endowment is doing ok. Would I be better off putting the cash somewhere else?

Standard Life endowment plan (managed fund)
Start 1 Feb 1996 Matures 1 Feb 2021
Target £31,350
Projections (from feb07) 22700, 28700, 36100
1Feb07 - £8910.20 (surrender value)
1feb06 – £7625
Monthly payment £56.30

dunstonh

I would get that policy reviewed asap. Its unit linked, which is good, but the managed fund is not their best option. They do have a good range of alternatives and you can amend those funds to a better spread.

Whilst it isnt the best option, the higher projection value is within it's potential. If it was mine though, I would look to some of the other funds and get a better spread.

JoeK_3

I would add to dunstnh comments that you may need an IFA to make recommendations for you if you were moving out of the managed fund.

JoeK

Seamonsters

Thanks for the advice.
Much appreciated:beer:

Seamonsters

I know an IFA would probably give the best advice but would Standard Life be able to advise me on this ?
Also, out of interest are the 'better options' you mentioned more risky ?

dunstonh

I know an IFA would probably give the best advice but would Standard Life be able to advise me on this ?

No. Standard Life would refer you to an IFA. It falls under advice and most insurance companies dont have advisers any more. Plus, tied agents dont give advice on that sort of thing anyway.

Also, out of interest are the 'better options' you mentioned more risky ?

Not necessarily. A spread of funds can be weighted to match your risk profile. The fund you have now is medium risk and a spread can range from cautious to high risk. The range itself, whilst quite good, doesnt go higher in risk though than that as it uses more conventional investment areas.

Jennifer_Jane

Dunstonh - what would be the cost to the policy for changing funds, please?

Am just wondering if there would be a cost to the policy and also a monthly or annual management charge?

Thanks
Jen