endowment surender

savo_2

Hi All
My morgage is split into part repayment and part interest only.
The discounted rate i have is just finishing, so i checked with a financial advisor about the best deals on the market. He looked at all the mortgages including the endowment which is showing a £15000 shortfall .
He as recommended converting all the loan to repayment by surrendering the endowments back to the insurance companies, use the surender value and increase the term from 8 years to 16 to make good the endowment shortfall.
So my question at last in principal is this a good ideal??

dunstonh

It may be. It may not be.

I assume your financial advisor (and its important that it is a financial advisor and not a mortgage advisor as mortgage advisors are not allowed to recommend surrender of an endowment policy, yet it is not unknown...) has written to your endowment provider and requested the usual policy information (usual as in the info any financial decent advisor would ask for) to enable them to make the recommendation.

Depending on what information the endowment provider gives, that would allow a suitable recommendation to be made. Without that information, its all guess work.

EdInvestor

Hi savo

Tell us a little about the endowments, can you?

Company it (they?) are with
Guaranteed sum assured
Total bonuses so far
Surrender value
Maturity date
Monthly payment
Would you need to replace the life cover?

In principle the idea seems sound and would work for many people, but not all endowments should be surrendered, they need to be looked at individually.

savo_2

Yes, my advisor had obtained surrender values from the companies.
I have 2 endowments a small one for 3000 with norwich union. And the main one for 29000. This is with standard life unfortunatly he has all my documents at this time.
Thank You for your response

dunstonh

Well, in the case of Standard Life, if its With Profits, i certainly wouldnt surrender it at this time. With demutualization around a year away, you would kiss goodbye to the demutualization payout. NU policies are now adding terminal bonuses again and a recent rate hike was announced. May not be enough to keep that one but we dont know enough.

You could always go repayment on the whole lot and keep the Standard Life plan going until demutualization and after that make your mind up what you want to do with it.

EdInvestor

Savo

I quite agree with dunstonh, assuming you are a member of Standard Life ( did you get voting papers for the AGM in April?)

Kerry_o'keefe

I have asked this before but did not have all the info

Company : Eagle Star (Zurich)
Guaranteed sum assured : £5283
Total bonuses so far : £3412
Surrender value : £6865
Maturity date : October 2011
Monthly payment : £22.02
Would you need to replace the life cover? : No
This years Bonus Rate : 0.25%

I really would like to surrender this policy (any help on how to do that by selling to a third party would also be welcome). However, I do not wish to cut of my nose etc etc. The money would be taken off current mortgage and monthly payment also added to mortgage payments.

Any advice much appreciated

Kerry :rotfl:

EdInvestor

Hi Kerry

If you cashed it in and put the surrender value in the bank @4% over the period and also paid in the premiums, at maturity you would get 10,475.

This is compared with the guaranteed value of 8,693, plus whatever bonuses of the 0.25% variety you could expect, ie not a lot more.

Assuming your mortgage interest rate is higher than 4%, your "return" would be better if you used the money to reduce the amount outstanding.

Eagle Star is not a long term WP provider,this fund is closed, and I'd expect no real improvement. You could try to get a quote ( google for "TEP traders") but I doubt if anyone would be interested.

I would proceed as you suggest.

Kerry_o'keefe

Many thanks for the advice Edinvestor. I have been looking to ditch Eagle Star for years. Thanks again.

Kerry