Ditching ex-mortgage endowment - what to do with the money?

thegreatsoprendo

Millyonare said:

The original post says endowment maturity is in Jan 2023.

If no fee, and no punitive bid-offer spread, if it were me, I'd cash it in and payoff half the mortgage.

Not advice, etc. Just a personal view.

Thanks and apologies, my mistake, I meant Jan 2024. I've edited the OP.

That's pretty much what I was planning but I can't pay off half the mortgage immediately (at least not without penalty) which is why I'm interested in thoughts on what to do with the money for the 22 months until I remortgage in June 2024.

Daliah

Assuming you have already decided to terminate your endowment policy early, the only sensible thing to do with money that you want to spend in 22 months time is to put it into one or more savings accounts. A comprehensive list of savings accounts is here: https://moneyfacts.co.uk/savings-accounts/; you might also want to have a punt with Premium Bonds though you should reasonably expect to make less than in savings accounts.

Don't forget to factor tax into your considerations.

pjread

I'm surprised that an endowment would be structured so as not to encourage holding to maturity... 

dunstonh

pjread said:

I'm surprised that an endowment would be structured so as not to encourage holding to maturity... 

Early endowments used to.  Later ones would often equalise the current value and the surrender value 3-5 years before.

refluxer

Have you checked that the payout would be tax-free if you cashed it in early ?

Beddie

Either decision won't make a massive difference, so I'd just keep it until the maturity date.

thegreenone

If there's only another 16 months to go, I think I would keep it running. 

Let it mature in Jan 2023, put it in the best paying easy access account you can find and then you have a massive whack when you remortgage in June 2023. 

I realise this may mean going onto the SVR for a month or so.  But, hopefully it will halve the mortgage payments and then put that into either paying the mortgage off quicker or longer term savings/pension.

It also keeps it out of reach until just before you remortgage.

swabaxter

Thanks for the question. I'd suggest a spread on investments including £10k on the stock market. There is a certain car company that just built their 3 millionth vehicle and plan to build another 8-10 factories. I first rode in one over 10 years ago and realised the world had changed for ever!. Good Luck.

Daliah

swabaxter said:

Thanks for the question. I'd suggest a spread on investments including £10k on the stock market. There is a certain car company that just built their 3 millionth vehicle and plan to build another 8-10 factories. I first rode in one over 10 years ago and realised the world had changed for ever!. Good Luck.

Any investment for less than 5 years, preferably longer, is a complete gamble. 

Section62

Daliah said:

swabaxter said:

Thanks for the question. I'd suggest a spread on investments including £10k on the stock market. There is a certain car company that just built their 3 millionth vehicle and plan to build another 8-10 factories. I first rode in one over 10 years ago and realised the world had changed for ever!. Good Luck.

Any investment for less than 5 years, preferably longer, is a complete gamble. 

Yes.  The "good luck" is an essential part of that post.

Especially when the proceeds of the investment are earmarked for paying down a mortgage on the OP's home, and on the current valuation would allow them to halve the outstanding balance.

Personally I would tend towards lowering risk in that situation - which is the opposite of buying shares in a company which has a habit of speculating on bitcoin.