Would it be foolish to surrender my Standard Life endowment ahead of its 28 August 2004 expiry date? The mortgage originally linked

Would it be foolish to surrender my Standard Life endowment ahead of its 28 August 2004 expiry date? The mortgage originally linked to this policy was paid off several years ago so it remains as a savings vehicle. Its current surrender value is £20,235.15 and next month’s projection is £20,463.05

Moneynet Q. I could raise it in other ways but the simplest solution would be to surrender this policy.I have read that terminal bonuses may possibly be adjusted. Is this less likely with Standard Life, or with the anticipated financial downturn, is it just as likely whichever the insurer?CB, by emailA. While I rarely advise stopping a policy before its maturity date, there may be some merit in doing so here. Standard Life last made with-profit bonus declarations in February, reducing its payouts to investors to reflect falls in the stock market. Since then, markets have fallen further; when Standard Life makes its next bonus declarations, further cuts are likely.The question is whether there is enough time for markets to recover before your policy matures to replace the bonuses that are likely to be taken away.

The probable answer is no.And given that Standard Life is not applying a market value reduction (MVR) – an additional exit penalty – and that you do need money, it would seem logical to cash in your policy now.Be warned, though, that this suggestion may not stand if Standard Life cuts bonus rates again or adds an MVR before you manage to get your cash.To answer the second part of your question, all with-profit providers are likely to reduce terminal bonuses in the current environment.Q. I work in Germany, where I rent a flat, and own a property in the UK that I let out. My current mortgage (with Abbey National, backed by a Standard Life endowment) expires in two months, and I’m keen on remortgaging to a fixed-rate deal, again backed by an endowment.AH, GermanyA As an ex-pat buy-to-let borrower, your options are limited. One of the best deals is from BM Solutions (part of HBOS), which offers a discount mortgage of up to 95 per cent of the property value to ex-pats. This is provided that it is your only or main UK property and that you work for a large multinational, a big national company or a government and intend to return to the UK in due course.BM Solutions also offers fixed rates up to 85 per cent of the property value. So the bigger your deposit, the more options you will have.Though you ask about a part fixed-rate/part endowment mortgage, I suspect you mean part endowment/part repayment, as you may be worried about whether the policy will pay off the loan. Standard Life is one of the better-performing endowment firms, but switching part of the mortgage to repayment is often a wise precaution.With buy-to-let, however, repayment mortgages are less tax efficient because as the capital is steadily repaid, the interest goes down.

This means there are less expenses to deduct from the rent before assessing any tax liability.Depending on the rate you are now paying, it may well be that by remort- gaging you reduce your monthly repayments. This may enable you to trans- fer most if not all of your mortgage on to a repayment basis, leaving enough money to keep the endowment running as a long-term savings plan.If you want to remortgage partly on to a fixed rate and partly on a discount or tracker rate, many lenders offer this.Sindie was assisted by Patrick Connolly at independent financial adviser (IFA) Chartwell Investment (01225 446556), and by mortgage broker Charcol (0800 718191).Write to Sindie at the IoS Business section, Independent House, 191 Marsh Wall, London E14 9RS or sindie independent.co.uk Queries will be answered by an IFA. ith-profits funds came under the spotlight again last week for all the wrong reasons as the precarious state of the Pearl Assurance fund was disclosed. Owner AMP, the Australian insurer, reassured investors that cash was available to prop up Pearl after the admission that it is in breach of the minimum capital requirements of the Financial Services Authority (FSA). Moneynet With-profits funds came under the spotlight again last week for all the wrong reasons as the precarious state of the Pearl Assurance fund was disclosed. Falling stock mar- kets have created problems for most life firms, with several making bonus cuts in the middle of the year – an almost unheard-of move. Norwich Union reduced bonuses by 5 per cent in July, followed by Friends Provident’s 6 per cent cut on 700,000 policies in August.