mortgage and endowment help

flopsy1973

Hi
our fixed rate is up next month, we are looking now at taking it elsewhere, what are most people tending to go for fixed and for how long. We have a house worth £160k with a balance of 77K left on the mortgage. When the mortgage was taken out originally a endownment was taken out as it was a interest only mortgage, it is now a repayment mortgage.
The endownment has a surrender value of 26K with prudential and 7 years left to run with payments of £112 a month.
Is the best option to use this endownment now to bring down the balance of the mortgage and if so how ?. We were told by Prudential we would have to get a solicitor if we were to sell it on, is this the best option.
Also would a open plan type mortgage be suitable as my partner does tend to keep quite a high current account balance of between 10-20K at times
Sorry for all the questions thanks for your help

YHM

If you encash the endowment now, you won't realise the full maturity value. If you don't need to encash it, then don't.

Open plan as in offset? Its an option for you.

Invest in a good broker and they will do the work for you

dunstonh

We were told by Prudential we would have to get a solicitor if we were to sell it on, is this the best option.

is it a Pru original endowment or a Scottish Amicable? Most Pru originals are close to target. Although it can depend on the target growth rates used.

flopsy1973

Hi
thanks for that is it not better to surrender or sell it on now and use that to reduce the mortgage than waiting for the maturity date. It has not done that well 112 a month since 2000 with value of 26K ?????


I will find out if the endowment has something to do with Scottish amicable


we have spoken to London and country but they were not much help regarding the endowment


Also is it better to go for long fix are we really going to see a splurge in interest rates in the next few years???

TrickyDicky101

flopsy1973 wrote: »

Hi
thanks for that is it not better to surrender or sell it on now and use that to reduce the mortgage than waiting for the maturity date. It has not done that well 112 a month since 2000 with value of 26K ?????

It is a poor compound annualised return (of approx 0.8% pa) however, it does depend on what type of endowment you have and on what basis the insurer has quoted the surrender value.

It *probably* has significant exposure to equity markets so it is possible that a lowish quoted figure is simply down to timing [when the valuation was determined].

As is ever the case with investments, prior performance cannot be relied upon to be an indicator of future performance.

dunstonh

we have spoken to London and country but they were not much help regarding the endowment

They are not advisers. So, they are not allowed to go into areas outside of their remit. It would be a regulatory breach if they did. So, its not that they are being unhelpful. It's just a limitation of their service.

It has not done that well 112 a month since 2000 with value of 26K ?????

Remember that they dont tend to show a profit for the first 10 years. Charges are front loaded. The back end is where they make the most. This is not to say it will hit target. We dont know the target growth rate yours was set up with.

flopsy1973

so in theory it will have paid most of it's fees by now yet the 2016 and 17 statement warns of a amber warning of it not meeting the 48k target amount in 7 years time.
We have been told that due to her income she may not possibly be able to get a mortgage and possibly will only get a mortgage offer with her current provider Halifax. They said possibly other lenders will consider her if she uses the endownment but what is the best way to do this.
It is the advice regarding the endownment we are really struggling with
???

dunstonh

yet the 2016 and 17 statement warns of a amber warning of it not meeting the 48k target amount in 7 years time.

projection rates nowadays are actually quite low. Lower than the long term average returns. To be only on an amber warning means it is not far off.

It is the advice regarding the endownment we are really struggling with

If you went to a local advice firm that does full service then you would not have a problem. They could analyse it and give advice.

flopsy1973

Update
Spoken to another adviser who was heavily hinting to get rid of the endownment to put towards mortgage but could not give specific advice.
Spoke to financial adviser but they said the fees involved to give advice would not make it worthwhile so we are still bit stuck

the difference between repayments between the full 78k or 52k if we use the endownment now is around £164. We pay £120 into the endownment monthly, so surely it is not worth keeping until the end of term in 7 yrs time???? The target amount is £48k
surrendering the policy is the only option or can they still be sold ??
Thanks

flopsy1973

any advice on this would be appreciated from what iv read endowments are not worth sticking with ???

sammyjammy

You seem to have had plenty of free advice which you aren't listening to.....