Adding to Endowment

Harrikent

Hello.
I have an endowment, which is 20 years gone, other 5 to go. It was originally attached to my mortgage, but I've long since changed my mortgage to a repayment and also started increasing mortgage payment amounts. There is now a high probability that my mortgage will be cleared in 5 years, but even if it isn't, the remaining mortgage will be very small and manageable. What I would like to know is can I add lump sums and increase monthly payments to my endowment. The return at the moment on the endowment is pretty good, much higher than my mortgage interest rate. But, as I've only 5 years left, will I be liable for tax on all or any part of the final payout?

TrickyDicky101

Harrikent wrote: »

Hello.
I have an endowment, which is 20 years gone, other 5 to go. It was originally attached to my mortgage, but I've long since changed my mortgage to a repayment and also started increasing mortgage payment amounts. There is now a high probability that my mortgage will be cleared in 5 years, but even if it isn't, the remaining mortgage will be very small and manageable. What I would like to know is can I add lump sums and increase monthly payments to my endowment. The return at the moment on the endowment is pretty good, much higher than my mortgage interest rate. But, as I've only 5 years left, will I be liable for tax on all or any part of the final payout?

The endowment is very likely a qualifying policy and thus has tax benefits associated with it - these would very likely be lost if the premiums were amended (say, by increasing them as you suggest).

Much better would be to choose a savings vehicle such as an ISA for any additional amounts which would allow you to mirror the investments in the endowment (should you so desire) or choose an equivalent/better investment mix.

dunstonh

What I would like to know is can I add lump sums and increase monthly payments to my endowment.

No. It would turn the plan into non-qualifying and the provider should not allow that. Its a dead product from a different era. PEPs then ISAs killed it off.

The return at the moment on the endowment is pretty good, much higher than my mortgage interest rate.

That isnt a reason for using the endowment of a tax free option.

Harrikent

Thank you for your replies. I will look into what's available on 5 year fixed rate. I hadn't contacted the provider, maybe worth seeing what other saving schemes they offer too.

dunstonh

I hadn't contacted the provider, maybe worth seeing what other saving schemes they offer too.

There are not many insurers left retailing own brand S&S ISAs direct to public. A few have some good platforms but their own brand funds tend to be poor quality. That is not typically the best way to invest.