Unit Trust Endowments

EdInvestor

travelling1 wrote: »

I have technically paid in £6225 and the surrender value yesterday was £6080. It is a mixed unit fund and the estimated rate at 6% is £33,500

If you surrendered it and then either paid back the loan or invested the lump sum and premiums at a return of 6% net to maturity, you would get 40,485.

This comfortably beats their 6% projection. The reason is high charges, taxes, and the cost of life cover.You would be best to surrender and add the proceeds, including the premiums into your offset.

dunstonh

What about deducting the cost of replacement life cover on your projection Ed. Not including it will distort the benefit/loss of surrender.

travelling1

I think that I should start from the very beginning. I don't think that I have explained this as well as I could have done!

In 1999 I bought a house for 36k and took out an endowment with a view to it paying back £32,850 in 25 years with Winterthur. It is a Home Provider life assurance. I sold that house in 2006 and made 82k. I kept the endowment on as advised by the FA.

I met and later married my husband to be who owned his own cottage whilst I owned this house. We did my house up and then sold it.

We bought another house with the money from my original house. We did this as the cottage was too small for both of us and started a repayment mortgage. Which at present we owe 95k. We renovated the house whilst living in the cottage. We bought for the house for 160k and renovated with 25k.

The cottage is now up for sale and we should make about 70/75k ish.

So, we are paying for 2 mortgages and 1 endowment. As I said earlier, in my first post. Money is tight paying for 2 mortgages and 2 sets of bills. The mortages and endowment are almost £1000 without bills.

We have £1500 in an ISA and are in overdraft debt by £1500 which our banks allow us to do, with no charge. We earn about 46k a year.

The original question was, when is the best time to cash in the endowment if money gets so tight that we need money? I know that it has something to do with the stock market, but I'm not sure which bit. I have read somewhere, possibly interpretting wrongly, that depending on what the stock exchange is doing, depends on how much money you get back, or maybe that's just pensions? So, if I was to surrender the policy, I obviously want to get the most money that I can. This is the information that I need, which no-one has given so far.

The other part was should I surrender my endowment policy, because it's just not going to give me the money that I've paid in? When I would have been better putting it into another account? Do I have to wait another 17 years to find out, or do I loose £100 now and get on with it saving somewhere else.

Now, with moving home, house renovations and getting married, It wasn't at the forefront of my mind to change my address. So I've never received the last 2 years statements. You did give me the kick up the backside to sort it and the information is on it's way!

The house mortgage is on a fixed rate of 4.7% and has been for the past 2 years, but is coming to the end in July 08. Hopefully, once the banks have sorted themselves out, we should sell our cottage sometime later this year. We hope to put 50k into the mortgage, leaving us with 45k to pay off. We need the rest to complete the house renovations.

We need another mortgage in July 08. We thought that we would go for an offset tracker mortgage, about 6.40% but with no tie in (But that's in debate in our house) but without the constraints of a 10% additional pay in, because it would be silly to have 50k sat in an high interest account, because it would save us more money putting it into the mortgage, rather than a high interest account. I know that the mortgage will go down, but we will be adding the extra £300 pounds to the account regardless. Then we would add any extra as we went along, which there should be some once we sell the cottage.

I'd like to add, that we are generally sensible with money, but we do like to go out every Friday night!

Anyway, hope that makes it more clearer!

Thank you so much for your help so far.

So really the Winterthur policy doesn't have any bearing on anything. It is at present a savings account with life cover. I have additional for the extra 67K to cover the mortgage of the house. So my Husband wouldn't have any problems paying for the mortgage. Plus, he would get my lump sum from work, which should more than cover it and I don't want him to have wild night out too frequently if I was to die! He might enjoy himself!!