mortgage advise?endowment?

jamesey

hi i bought my house in 1999 for £53000 over 25 yrs and we had an intrest only mortgage with an endowment that we pay £80 per month into and have done for 10 years , we have just last year in july changed our mortgage from an intrest to a repayment im now paying £415 per month plus we kept the endowment on as a back up , savings plan
im wanting to know why my endowment has only made £7100 or so in 10 years , does this sound right this is with l&g , its an stocks and shares isa type endowment if that make sence , in 2007 it was worth £8100???it also says we are going to be £11600 short on our last statement what can i do there

dunstonh

im wanting to know why my endowment has only made £7100 or so in 10 years , does this sound right this is with l&g , its an stocks and shares isa type endowment if that make sence , in 2007 it was worth £8100???it also says we are going to be £11600 short on our last statement what can i do there

First thing. It isnt an endowment. Its a stocks and shares ISA.

Second thing is that it will be an L&G index tracker. Not exactly the best way to invest. 100% in any one investment is poor quality (acceptable from a regulatory point of view and typical of that sort of product but its not quality).

The reason it has gone down is the credit crunch and global recession. You may have heard of these on the news The stockmarket fell by 45% from high to lowest point during that. It has since recovered over half that but its still down from the high.

As is normal with a Labour Government historically, the stockmarket has not performed well during their tenure. In fact, its one of the worst 10 year periods in history.

The problem with illustrations is that they give you an assumed growth rate that is the same every year. i.e. 5% a year, 7% a year and 9% a year. Investments dont have straight line returns like that. One year it will make 20%, next it will make nothing, year after it will lose 10% etc etc. So, you find in the early years the projections will fluctuate all over the place.

I would suggest you get a local IFA out to see you and they can explain the ISA more and transfer it to a whole of market option and give you a more modern and appropriate investment spread.

jamesey

Anyone else?

Thrugelmir

Keep the ISA as a long term savings plan for a rainy day.

Depending on your mortgage terms drop the ISA to £50 per month and increase your mortgage payments by the additional £30.

EdInvestor

Suggest you detach the ISA from the mortgage completely by transferring the plan to a discount broker which will stop charging you when you make your contributions and rebate other charges.

You can then reinvest the existing money and the new contributions into a much better quality mix of funds to boost the value of your long term investment growth.

https://www.h-l.co.uk is a popular choice of discount broker.