Unemployed & the Evil Endowment Shortfall

changlyn8

Greetings everyone.
Initially I took out a mortgage with my partner but when we broke up I got him to sign over all his rights (including the endoment policy) to me and paid him a small sum of 5p.

To cut a long story short I made a claim that the endowment was mis-sold and it was agreed that I could amend my mortgage to a repayment one but I would need to surrender the endowment policy. Although I have all the paperwork signed I have not sent this in as after reading one of the notices on the board I sat down and used excel to see what I would be paying if I changed to a repayment mortgage.

Currently my endowment (with Woolwich now taken over by Barclays) looks like this:
4% each yr 6% each yr 8% each yr Target Amount
Project final amount £30,100 £36,500 £44,300 £58,000
Projected Shortfall £27,900 £21,500 £13,700

As you can see its a nightmare. I have a son and despite desprate attempts at finding a job I am still job hunting like many others. However, I cannot sit around and wait until I do get a job I know that I have to do something NOW for my own piece of mind and for my childs future.

I am not under the illusion about chnaging mortgage lenders as no-one would give me a mortgage as I have no income.
Nevertheless, I know I need to change to a repayment mortgage and thought that it would be best to take out a fixed mortgage thus I would be able to budget better than I already do.
However, Barclays rates are appalling and despite calling them about finding a better deal so far no luck. I could just about live with a rate of 5.39% on a 5yr fixed rate but the sales person said that there would be an arrangement fee of £600.00 but I would need to have a Lifetime Value Tracker mortgage (still trying to read up on this one).

When I asked if there was not something else that the sales person if the company was not able to offer another solution due to my financial situation I was told NO.

Any advice. I thought if I approached the company and tried to sort this mess out it would be better for all concerned as I certainly do not want my flat repossessed in 12 years time.

Thanks to all.

dunstonh

As you can see its a nightmare.

Not necessarily. The projection method is known to be highly flawed and can often show high shortfall projections when the amounts are much smaller or may not even exist. It would depend on what funds you are invested in as to whether those projections are realistic and whether they have projected from the surrender value or the current value (yes, some providers quote from the surrender value which can automatically lower projections by many thousands of pounds).

You look as if you are stuck between a rock and a hard place. Some lenders would add the arrangement fee to the mortgage, although you should note that you would pay interest on that. However, if it gets you out of the hole, then it could be worth it.

EdInvestor

One thing you could consider is to surrender the endowment policy and use the surrender value lump sum plus the misselling redress money to reduce the amount owed on the mortgage.

Then increase the existing mortgage payment by the endowment premium, thus overpaying the mortgage and reducing it further.

This will at least make a start on the probelm of paying it back even if you can't manage the full repayment mortgage at present.

If you need the life cover, replace it before you surrender the policy.

changlyn8

Thanks for the reply. I currently pay £83.53 every month for the endowment policy and an additional £57.00 towards the mortgage to prevent it from going into arrears. The actual cost if I was to change to a repayment mortgage at 5.39% would be £354.17 less £189.98 (the amount that the DWP would pay at 6.08%) this would leave a shortfall of £164.19 minus the combined amounts of £83.53 + £57.00 (the endowment + arrears money) that would still leave an additional £23.66 that I would need to find from the money I get from the DWP.

So really there is no additional money to pay towards reducing the balance.
So I reaaly am stuck.

Barclays only offered to use the surrender value of the endowment policy and the missselling amount to bring me to a point where I would have been if the policy had been a repayment one at the outset. So there is no way to reduce the mortgage balance further.

EdInvestor

Suggest you see a mortgage broker to check the best strategy in the light of the DWP contribution.

changlyn8

Supposed to seean advisor next week Friday will double check that he is able to advise on Mortgages he originally said yes but no harm in asking again.

Thanks.
Oh interesting reading on the withdrawal of Woolwichs the Lifetime Tracker Mortgage.

changlyn8

Bad luck for me, I phone the person I had arranged to see for some financial adice but alas he said that mortgages were not his specialist area he said he would get a collegue to contact me but it never happened.

I phone back but the first advisor said that he would put a request in but that his collegue must be wuite busy not to phone me.

Anyway I have not given up I will simply have to wait for a list of local advisors and kep trying.

How much should I expect to pay, as I am an unemployed mother I need to know these things before hand tp try to get the money together.

Barclays have only given me till the middle of next month to accept there offer if I do not I will have no recourse in the future.

I desperately want to change to a repayment mortgage but the rates offered by Barclays/Woolwich are not very good but I cannot change lenders becasue of my current job status.

Any advice would be much appreciated.


Thanks

dunstonh

Bad luck for me, I phone the person I had arranged to see for some financial adice but alas he said that mortgages were not his specialist area he said he would get a collegue to contact me but it never happened.

Endowment discussions require someone to be authorised in investment class business. Mortgage advice requires someone authorised in mortgage class business. It is becoming more common now for the two things to be handled by different advisers. That said, you did tell them it was mortgage related so you would think they would have got the right person. It wasnt a salesforce that you approached was it? (in which case, best avoided anyway).