Should i change to Repayment ?

davyneill

Here's a quick history...we started an endowment mort in 93.(60k) We moved house in 01, so took out an extra endowment (100k).
So, now we've got 170k-ish to pay over 20-ish years.
Having been paying in so much for so long into the endowment bits, are we mad to change? or mad not to ??!!

Thanks in acticipation.

Davy

roversbabe

Don't know if this helps but I've just changed to repayment on my mortgage AND I'm still paying into the endowment (from '95) - Once I can see the mortgage reducing, I'll do the number crunching on the endowment and see if it is worth carrying on.

HTH

Ian_W

First thing is - have you had red letters warning of a high risk of a shortfall on either or both endowments?
If yes then you need to do something to prepare for it, whether you need to move all your mortgage to repayment or only part of it depends if you're going to keep the endowments going or cash them in.
If you haven't received a warning letter for either then the insurers must be pretty confident they're on track to meet their target, particularly after all the bad publicity about mis-selling.
Personally, I did receive a warning & looked at the shortfall on the lowest projected growth they now give [4%], changed the mortgage to repayment for the balance above that and kept the endowments to pay for the rest of it.

dunstonh

Projections are not a reliable single source of information. Some insurers are so weak now that they pay zero bonus. So even if you look at the 4% projection, you are not preparing enough. Equally some endowment funds are growing in excess of 10% p.a. but if you have target growth rate of 7% and the projection shows 4%, then obviously that would be showing a shortfall.

Many decent endowments have been surrendered on the misconception that they were bad and many rubbish endowments are being kept on the assumption that they will do 4% at least.

You cannot rely on the projection alone as it doesnt mean anything without knowing a bit more about the plan and where it is invested.