Endowment providers should be writing regularly to their policyholders to keep them informed of how their policy is performing against its target investment level.
Letters will be coded as red, amber or green depending on the likelihood of the policy failing to meet its target. Policyholders receiving red or amber letters may be tempted to surrender or cash in the policy if it looks as though it will not deliver the returns required to pay off a mortgage at the end of the term.
But surrendering your endowment policy may not be the best thing to do, particularly if the policy is still within its first five years as there could be heavy surrender penalties and the amount returned could be far less than the amount paid in. An endowment policy will also have included an element of life cover which is another reason that early surrender may not be cost effective.
It may be worth asking for a quote for a surrender value. However, this amount will usually be much lower than the market value of the policy. Another possibility therefore could be to look into the option of selling it.
A market has grown around the recently publicised problems with endowments. There are now many companies keen to buy up endowments to sell them on and will often make an offer of a price higher than the surrender value. These are known as Traded Endowment Policies or TEPS.
If a policy is suitable to be traded, this can provide an increase on the surrender value from 2-15% or even more. The policy will then in turn be sold to an investor who will benefit from the gains when the policy matures.
If you are thinking about trading in or surrendering your endowments, please click on our Mortgage Enquiry Form and we will arrange for one of our experts to contact you. It is obviously important that the alternative arrangements are made to ensure that the mortgage liability is covered and our independent advisers will also be able to help with this. Alternatively, you can call us on 0844 776 0756.
|Lender||Initial Rate||Duration||Standard Rate||Overall Cost For Comparison||Max Loan To Value||Fee|
|2.59%||2 years||5.69%||5.4% APR||75%||£999|
|2.69%||2 years||4.99%||4.9% APR||75%||£495|
|2.94%||2 Years||5.69%||5.4% APR||75%||£199|
|2.99%||2 years||4.99%||4.9% APR||85%||£495|
|2.99%||3 years||4.99%||4.6% APR||70%||£499|
|3.0%||2 years||5.69%||5.5% APR||80%||£999|
|3.19%||5 Years||4.79%||4.2% APR||80%||£995|
|3.35%||To Jul 2014||4.95%||4.6% APR||75%||£999|
|3.5%||2 years||5.49%||5.1% APR||75%||£595|
|3.84%||2 years||3.94%||4% APR||90%||£499|