Savills’ endowment plan

Amanda Jarvis

February 5, 2003

Most endowment policyholders now face the prospect of having to extend the term of their policy or increase contributions to enable them to pay off their mortgage. But by remortgaging to a better rate of interest, homeowners can use the savings made to top up their endowment or they can convert part of the mortgage to a repayment basis, which in many cases could actually save money.

Commenting on this, Mark Harris, Director of SPF, said: “This avoids the need to cancel the endowment and convert the total mortgage to a repayment basis. The problem with that route is the loss of benefits already accrued on the endowment. Rarely is it a good idea to cancel a contract as surrender values are low.

“If you are inside a mortgage term incurring redemption penalties, then it is best to discuss with your lender and adjust an element of your loan to a repayment mortgage. But if you are able to remortgage you can take advantage of today’s great mortgage rates which will make the whole process more cost effective.”

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