Currently, we've got an interest only mortgage with the Halifax and an endowment with Standard Life.
I have taken steps to switch the mortgage to Portman's 5 year fixed rate repayment mortgage. However, I'm not too sure what to do with my endowment. Standard Life weren't much help because they 'couldn't offer me advice'.
What I am thinking of doing is just stop paying into the endowment and collecting it at the end of it's term (there is about 18 years left - about £5500 in the pot).
Do you think this is a bad idea?
I'm told that I will still be eligible for any windfalls if I do this
- is this correct.
Obviously, I will loose my life cover that my endowment gives me, so I'm going to have to get some somewhere else.
Depends. If you're in the Managed and/or With Profit funds, they will have recently told you about their "promise". It's some fancy arrangement whereby they "guarantee" that there will be no shortfall in your payout (unless market performance dips below 6%, which it has done, but even so they will make up an appropriate part of any shortfall). This is probably quite a useful thing to retain, since it boost the effective return on this investment. If you stop payments you will lose the rights to any benefit from this promise.
Oh, and don't just stop payments by cancelling your Direct Debit. Write to them telling them you wish to make the policy "paid up" and that they should stop collecting the premiums. Once your instructions have worked their way through the system, and they have in fact stopped collecting, *then* cancel the DD, just to keep things tidy.
By whom? It's worth double-checking. Not that it'll be worth much.
Actually, if you can afford to keep the premiums going *and* the higher loan payments from switching from interest-only to repayment, it's probably a good idea to stay as you were. Even though you will no longer need the maturity money to pay off your loan, you can view the maturity payout as a "windfall". It'll be rather more than any demutualisation bribe, and that way you're sure not to lose it, and you've still got the life cover as well.
Only if you think you need it. If you have a family/dependants, then you probably do. Otherwise it's a waste of money, and most lenders don't insist you have cover.
An endowment of that age might be just about worth something on the secondhand endowment trading market. There are about half a dozen firms operating it in, but I don't have their details handy.
Unlikely that a seven year old endowment is worth much to anybody. But as it is with Standard Life then there may be bonus in a few years but only if it is investing in the With Profit fund, which is more likely to be an argument for making it paid up, rather then sold or encashed.
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here.
All logos and trade names are the property of their respective owners.