My endowment policy has performed crap but it's currently worth just about enough to cover my outsta


J

JethroUK©

My endowment policy has performed crap but it's currently worth just about
enough to cover my outstanding mortgage

Should I

A/ Cash it in now and pay off my mortgage?

B/ Keep paying it for next 10 years just to keep up life cover and/or is it
ever likely to make money (worthwhile investment?)
 
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J

Jonathan Bryce

JethroUK© said:
My endowment policy has performed crap but it's currently worth just about
enough to cover my outstanding mortgage

Should I

A/ Cash it in now and pay off my mortgage?

B/ Keep paying it for next 10 years just to keep up life cover and/or is
it ever likely to make money (worthwhile investment?)
Do you think it will make more money than the mortgage interest you are
paying?

How much is the life cover worth? Is it just enough to pay the mortgage
off?


I would probably cash it in and pay off the mortgage.
 
P

PCPaul

Do you think it will make more money than the mortgage interest you are
paying?

How much is the life cover worth? Is it just enough to pay the mortgage
off?


I would probably cash it in and pay off the mortgage.

Check they haven't applied a 'Market Value Reduction' first - i.e. get a
current surrender valuation. You may find it isn't worth as much as you
think from the last statement. I have two in that situation and it's
touch and go whether to take the loss now or keep paying the premiums and
wait for things to improve...
 
J

JethroUK©

Jonathan Bryce said:
Do you think it will make more money than the mortgage interest you are
paying?
Million dollar question - I don't know and thats what i'm wondering

It's currently worth about half of the original mortgage/and so half their
predicted target :eek:)

My gamble is whether to use the little it's currently worth to clear the
little i still owe - or whether to stick it out and see whether it reaches
the predicted price (double what it is now) by which time i will have paid
off the mortgage and it all goes in my sky rocket :eek:)
How much is the life cover worth? Is it just enough to pay the mortgage
off?
Insurance just covers the mortgage which wont be there if i cash it in and
pay it off
 
J

JethroUK©

Check they haven't applied a 'Market Value Reduction' first - i.e. get a
current surrender valuation.
I understand an 'early redemption fee/penalty'

I dont understand the term 'Market Value Reduction'

I'm just investing money with them (just like any bank) = my house value is
merely a target for them to achieve, it's got nowt to do with them what my
house is actually worth (no more than my personal savings account)

Maybe the phrase does not best describe it

..
 
J

Jonathan Bryce

JethroUK© said:
Million dollar question - I don't know and thats what i'm wondering

It's currently worth about half of the original mortgage/and so half their
predicted target :eek:)

My gamble is whether to use the little it's currently worth to clear the
little i still owe - or whether to stick it out and see whether it reaches
the predicted price (double what it is now) by which time i will have paid
off the mortgage and it all goes in my sky rocket :eek:)
Look at it another way.

If you owned your house outright with no mortgage on it, would you
remortgage it and put the money into this endowment policy?
 
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Ronald Raygun

JethroUK© said:
I understand an 'early redemption fee/penalty'

I dont understand the term 'Market Value Reduction'

I'm just investing money with them (just like any bank) = my house value
is merely a target for them to achieve, it's got nowt to do with them what
my house is actually worth (no more than my personal savings account)
"Market Value Reduction" has nothing to do with the market value of
your house, but with the value of the investments.
 
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PCPaul

I understand an 'early redemption fee/penalty'

I dont understand the term 'Market Value Reduction'

I'm just investing money with them (just like any bank) = my house value
is merely a target for them to achieve, it's got nowt to do with them
what my house is actually worth (no more than my personal savings
account)

Maybe the phrase does not best describe it

As others have said, it's to do with the market value of the investments
behind the ewndowment, not of your house.

Basically the pot behind all the endowments is not currently big enough
to cover what they are all currently 'worth', so if you were to take out
the nominal value of your policy you wouod actually be reducing the
investment pot by more than your 'fair share'.

Market Value Reduction is what they wrote into the rules when you took
the policy out to safeguard themselves in this situation. Instead of
getting what you think you should be, you get your 'fair share' of the
pot instead.

For a smaller policy I have, that's £2900 instead of £3400 if I take it
out now.
 

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