Do I cash in my endowment

gazza67

I'm in a quandary.
I met with my bank yesterday to try and obtain a better mortgage as I currently have a tracker (+2.25) which will run for 16 more years ( owe £110,000).
My endowment has a current surrender value of £41,500 and has 18 months left (this is now free standing and was originally meant to make £39000.
When I went to the bank, my plan was to take out a 5yr fixed at 1.94% for £70,000 and keep the tracker going until endowment matured and pay the tracker off without penalties.
However, the tracker would cost £250 pm and the endowment £120 pm which would cost me nearly £7000.
If I cashed it in, consolidated a loan (£9000 costing me £190 pm) and added the monthly payments to my mortgage payment, I could reduce the mortgage term to 7 years thus saving me nearly £20,000 in interest!
My question is, do I cash in and forego my final bonus?
This policy is really flying at the moment ( I guess due to the favourable FTSE), nearly 5k since Brexit and are worried this could go down.

AnotherJoe

Are you sure there is a final bonus with this endowment? Not all of them have it.
If there is, then for the sake of 18 months I'd stick with it. Also, AIUI, for policies that have bonuses, the amount a policy is worth at a given time is locked in, so yours wont decrease in value, its just that the bonus may fall. If there is no bonus, then you might as well cash in now.

If there is a bonus and the £41.5k is locked in as a minimum, why not get a new fix for 2 years now (will be cheaper than a five year fix) and then remortgage at that point, when the endowment will have matured, with bonus?
If you could incorporate the £9k loan into the 2 year fix, that would deal with that now as well.

dunstonh

You havent told us anything about the endowment. So, we cant comment. We need detail.

Is it unit linked or with profits?
What is current value? What is surrender value?
Are there any enhanced terms? e.g. increased allocation rates from year 15 (that sort of thing)

gazza67

Thanks for the info guys...
The endowment was originally took out with Scottish Life (profit builder house purchase plan) and is unit linked (not sure what unit linked means).
My concern is that it may go down in the next 18 months, whilst I am paying interest against the money I could be paying off.
I guess I would need to ask them if there is a bonus and find out what sort of bonuses this type of plan has paid out in recent years.
With regards to value, this is obtained from their website and is listed as 'Life Surrender Value'; is this what I would receive if I cashed in today?
I appreciate any help you can give me.