Sell endowment or not

kevbev_3

I have been offered £23,325 for my Scottish Amicuble policy which is for £38000 and is due to run till June 2014.My mortgage is sitting at £26,500 as I have been paying it back recently to reduce short fall predicted in Endowment.Do I accept offer and then pay the other £3000 back and become Mortgage free.I am presently paying out about £169 per month for endowment and Mortgage.I wiil need to pay a fee of about £400 for early repayment on my deal which has a year to run.

maryotuam

I would wait a year to save paying the £400. Plus in the meantime there should be a life assurance element which should mean your or your OH would get at least the full £38000 if you or they died. Ater that I have no idea whether it is beter to surrender it but I'm sure other posters will be along soon to give you advice.

Dick_here

kevbev wrote: »

I have been offered £23,325 for my Scottish Amicuble policy which is for £38000 and is due to run till June 2014.My mortgage is sitting at £26,500 as I have been paying it back recently to reduce short fall predicted in Endowment.Do I accept offer and then pay the other £3000 back and become Mortgage free.I am presently paying out about £169 per month for endowment and Mortgage.I wiil need to pay a fee of about £400 for early repayment on my deal which has a year to run.

So how much is the endowment currently projected to pay out and what's it costing you monthly ?

dunstonh

I have been paying it back recently to reduce short fall predicted in Endowment.

There is no predictions given with endowments. There are sample illustrations showing three example rates of return. These rates could overstate or understate the true potential of the investment returns.

As it happens Scot Am has an over 90% success rate on hitting target and this year is expecting 98.2% of endowments to hit target and pay surplus. An improvement on last year and the year before and the year before. IIRC, 94% success rate in a year was their lowest level.

BrokeRage

maryotuam wrote: »

I would wait a year to save paying the £400. Plus in the meantime there should be a life assurance element which should mean your or your OH would get at least the full £38000 if you or they died. Ater that I have no idea whether it is beter to surrender it but I'm sure other posters will be along soon to give you advice.

But does it make sense to pay out 2k plus interest on the mortgage for a year when stock markets are so dodgy (which still has some effect on with-profits policies). If it was me, I would be tempted to sell now, put the cash in a good savings account and use the interest on that and the £169 endowment saving to build up most of the £3,000 you owe within 12 months, then repay the debt after the penalty expires. You aren't me though, so I wouldn't know your attitude to risk, but I reckon a bird in the hand is worth two in the bush at present.

Mind you, the people who buy endowents obviously think that they are a good investment!