Should we surrender?

bargainaddict

Hi, we would really appreciate some advice. We have just received our surrender value for our endowment policy and it would be enough to clear our mortgage completely. Is there still a market in trying to sell it on or is surrender the way to go?

Details are as follows

Royal London policy taken out 1987 due to mature 2010. Monthly premium £40.15, 23 payments remaining

Basic guaranteed value 9984.00
Previous bonuses 8726.01
2007 bonus 49.92
total guaranteed value18,759.93

Current mortgage rate with nationwide 6.49per cent
current mortgage payment 391.60 plus endowment premium and mortgage protection of £35
Surrender value offered is 21,590

The thought of clearing the mortgage is very tempting. All advice much appreciated.

bargainaddict

Forgot to say is it worth keeping the endowment going for the remaining term? Hubby is self employed and we almost lost our first home in the early 90's when the interest rates were almost 16 percent so with all the talk about the current financial situations we are very nervous. We have submitted the details to see if it could be sold and awaiting the result for that.

all advice very much appreciated

bargainaddict

can anyone help with some advice please. It would be very much appreciated.

EdInvestor

You could try selling it at https://www.apmm.org

If you surrendered it and used the money to pay off the mortgage and put the premiums on deposut at an interest rate of 6.49% to maturity you would end up with 25,509 pounds.So you need to get the maturity forecasts from RL and compare them with that figure.

Are you sure the surrender value figure is correct? It's unusual to have an S/V that's higher than the guaranteed value.

bargainaddict

Hi Ed, thanks for your reply. I have the letter in front of me and the surrender value is definitely 21595.58. We submitted the details to apmm on friday and have heard nothing as yet. Is it usually a straightforward process from deciding to surrender, also is there a standard policy re mortgage exit fees or are we best just contacting our bank about that one, not sure if they will charge us if we pay it off early.
Thanks for taking the time to help, much appreciated.

TonyMMM

IS there the possibility of a terminal bonus when the policy matures ? I just had a small endowment from Prudential which added about 40% onto the sum I was expecting when it matured.

bargainaddict

Not sure about a terminal bonus, how would I find out?

martinman3

Not sure about a terminal bonus, how would I find out?

The problem with terminal bonuses is that you need to wait until maturity to know what you will get.:D

bargainaddict

Thanks to this sites help we have just been offered an extra £2000 from a company called AAP, when you add that to the mortgage payments savings and the peace of mind knowing that the mortgage is paid off, we think that's the way forward for us. Thanks

bargainaddict

Hi, we have no other offers to match the first one. The company (AAP) have e-mailed us the forms to sign. Is there anything we should be aware of or is this pretty straightfoward from here. The guy on the phone said there were no fees, the figure he quoted was what we would get, but how do APMM make their money or has their fee been deducted already? Is AAP good?
Sorry for lots of questions, thanks.