Endowment mortgage

[giggly]

I have been paying into an endowment for 12 years now. I have had a small (£450)amount of compensation from Fcs after being mis-sold the policy.
My problem is the best payout will still be about £4000 short and the worst prediction is about £24000 of a shortfall.
I am tempted to cash it in now(still have 13 years) and use the money to reduce my existing mortgage and obviously change to a repayment.
I cant really see the point in continuing to pay when there is likely to be a significant shortfall.
Has anyone any advice.

[MrsMuddle]

I am in the same position (but without the comp!) the advice we got a few years ago was to make the policy "paid up" - ie you don't cash it in, but you don't pay anything more into it, and it will still mature at the original date. A lot can change in 13 years, and you probably won't get much for it.

I don't know if you can afford to switch to repayment without cashing it in though.

I also don't know if this would be best for you. It was about 5 or 6 years ago when we were given this advice. It's an option worth thinking about.

[pinkteddy]

We were going to do exactly that but were advised by our financial advisor to hang onto it. The cash in value of ours was significantly less than what we would have been offered to sell it on btw so definitely worth looking into this. Adverts for companies that buy them usually in finance/money supplements of the broadsheets at the weekend. Anyhow we have hung onto ours - still not sure if it was the right thing to do but time will tell. You are right to change to a repayment mortgage anyway even if you don't cash endowment in. If you do this think you can stop paying into the endowment but not cash it in if you wanted, check with the company. Worth exploring a few options IMO before cashing it in. HTH

[hopefully]

You almost certainly need to speak to a financial adviser about it - each endowment policy is different, and with some you'd be mad to keep it, and others you'd be mad to sell...

Sorry, that's not much help, but endowment mortgages are such a tricky subject it's absolutely impossible to give generalist advice!

[lilyloo]

giggly my dp will be able to give you free impartial advice here if you mail him.

[donbean]

we are in the same situation and this is what we did.
We spoke to our financial advisor and took on a total repayment loan this time.
(Last time we did half repayment half endownment.)
We are now fully repayment.
We have cashed in our endownment to pay for some work that we need on the house.
We have taken our repayment back over 20 years, like you we only had 12 years left on it.
However we can review this in a few years and pay more over shorter so we can chop and change as we need to.
Speak to lillyloos dp. There are lots of options available to you.

[BigGitDad]

THere are a few issues here;

1. What kind of endowment do you have? With profits or Unitised? With Profits mean a large proportion of the maturity will be paid by a final bonus and the maturity value of this is hard to predict (hence letters talking about the if your fund grows at 7% are irrelevant in a way). You will need to speak to the endowment company to see what the comparative endowments are paying out presently. Unitised endowments have units in them which rise and fall according to the value of the shares etc in the fund. Generally if the fund value is low and the market looks like it will grow (say like five years ago after the last stock market crash) then it would make sense to hang on asthe fund vale and so the endowment value will rise. I personally think that the UK stock market is still undervalued but it will be a rough ride over the next year or two.
   
2. If you can afford it I would always recommend having a repayment mortgage regardless of the endowment or if you can't afford it and want to keep the endowment maybe have a part and part mortgage where part is repayment and the other part Interest only.
   3)Do you surrender the endowment? Generally most people look at what they have paid in and then what they would get back and take it from there. If you do decide to stop the endowment as mentioned earlier you can stop the payments and you will get a pro rata apyment on maturity.
   
3. As said earlier you can lengthen the ortgage term and switch to repayment.
   You do have alot of options, but really you have to evaulate what you want out of the mortgage and what repayment method suits you best.

[giggly]

Great advice thanks for everyone responding so quickly for a very boring subject. I forgot to say that we will be emigrating within the next 2 years and our mortgage will be paid off outright. That was behind the cashing in bit. I was going to see an fa but thought I would run it by the lovely mn ladies.
Thanks for the offer of your husband lilyloo! I will email as soon as I get a bigger minute than I have now.

[lilyloo]

LOL at the OFFER of my husband hope he can help !