How does the present economic situation affect my endowments predicted shortfall

Lady_K

I don't have much idea on how endowment mortages work out apart from them being interest only mortgages but I just wondered how the present situation with the low interest rate and the economy affects my endowment mortgage in terms of the predicted shortfall I will have? My mortgage is due to end in 2014 and is going to be some thousands short, last year my statement said lowest about 10k up to about 20k butthat could change. I will not have that money to cover the loss even by then so I'm really concerned. I did claim miss sold endowmrent a few years ago and they gave me about £900 woweee

Its a standard life endowment mortgage with halifax if that makes any difference

dunstonh

I will not have that money to cover the loss

Why are you not planning for it? Likelihood of shortfalls were first known about 7 years ago. You still have over 5 years. You should at least convert 15k-20k of your mortgage to repayment basis.

I did claim miss sold endowmrent a few years ago and they gave me about £900 woweee

That means your endowment was not really that far from being off track at the time. Had you converted to repayment mortgage at the time you would not have been any worse off than had you started on repayment mortgage from the start.

Its a standard life endowment mortgage with halifax if that makes any difference

It means its not likely to be that good. Not the worst but the lower to middle projection is the most likely range.

ukcarper

My endowment with Norwich Union matured in January this year and paid out £1,400 less that the lowest figure (4% £24,900) on the last forecast (Jan 2008). Norwich union did reduce their bonuses last year so I think the fall reflects some of the recent losses.

I’m not sure how Standard Life compares to Norwich Union

getmore4less

Lady_K wrote: »

I don't have much idea on how endowment mortages work out apart from them being interest only mortgages but I just wondered how the present situation with the low interest rate and the economy affects my endowment mortgage in terms of the predicted shortfall I will have? My mortgage is due to end in 2014 and is going to be some thousands short, last year my statement said lowest about 10k up to about 20k butthat could change. I will not have that money to cover the loss even by then so I'm really concerned. I did claim miss sold endowmrent a few years ago and they gave me about £900 woweee

Its a standard life endowment mortgage with halifax if that makes any difference

What are you doiing with the money saved from the lower rates, this should be overpaying your mortgage now.

Start paying as much as you can, you can also plan to extend the term if overpayments will still not cover the short fall.

dunstonh

My endowment with Norwich Union matured in January this year and paid out £1,400 less that the lowest figure (4% £24,900) on the last forecast (Jan 2008)

As to be expected. An example projection at 4% for the year didnt reflect 2008 which was a minus 25% year (for typical medium risk funds).

I’m not sure how Standard Life compares to Norwich Union

Not as good.

Lady_K

I have not been in a position to save towards the shortfall unfortunately. I am out of work with a progressive illness so will be unlikely to return to work. I dont think I could get a repayment mortgage to cover it because of my position and I am not allowed to have over a certain amount in savings, not that I could save anyway. I realize it will soon come around and I'm in serious danger of losing my house and to be honest I doubt I'd be well enough to move house to downsize, I have thought about this. I did seek advise about this when I had the missold payment and was actually advised not to do anything because things could happen before then. The mortgage is not massive it was 27,000 over 25 years taken out in oct 89. Because of my illness I do really need to feel secure about keeping my home so I am getting really quite worried now

dunstonh

I am out of work with a progressive illness so will be unlikely to return to work.

Does the endowment policy have waiver of premium/contribution on it?

. I dont think I could get a repayment mortgage to cover it because of my position

It doesnt require you to get a new mortgage. You just ask your existing lender to convert £x amount to repayment basis due to an endowment shortfall.

I am not allowed to have over a certain amount in savings

The endowment is of course exempt from any means test.

Lady_K

I am not sure about a waiver of premium on the endowment would that be on last years annual starement, I havent recieved this years yet? What would that do?

I probably should have looked into this conversion of part of my mortagage before by the looks of it. I was not awatre it worked that way I just thought I wouldnt get it as I was out of work ill.

I meant savings like in an isa or savings account towards the shortfall. I cant overpay on my endowment part can I? I am getting help with the interest side only from dwp which goes to halifax since I have been ill and apparently I'm not allowed to overpay but that payment is very low at the moment due to the interest rate, I think its something like £40 a month now and I have to pay endowment bit myself which is around £34 a month

Rikki

You can make over payments even when the dhss is making mortgage payments for you.

Ask your bank how you can make payments off the capital balance.

Lady_K

Thankyou, even a little bit will be something towards it but thing is the dwp want a statement at the end of each year and if it shows more has been paid in that what is expected they reduce their payments.

I think I definitely have to make an appointment to see someone at the Halifax at least

dunstonh

I am not sure about a waiver of premium on the endowment would that be on last years annual starement, I havent recieved this years yet? What would that do?

A lot of older endowments have it. Its a benefit that kicks in if you are unable to work for more than 6 months. The insurer will take over the premium payments. It wont appear on a statement. It will be in the policy document or you can phone them and ask.

I cant overpay on my endowment part can I?

No you cant. However, you can make manual overpayments to the Halifax or ask them move part of the mortgage to repayment basis as mentioned.