What Exactly Is A Endowment Shortfall ??

jont80

I remember reading alot about mortgages a while ago and there was the big fuss with the policies not covering the mortgages when they matured ? Is that right ? What are the claims and reasons.I dont have or understand mortgages very much so if someone would be kind to simplify it for me i would be grateful.
Basically my mam and dad got a mortgage which was due its finally payments in the coming months.
The mortgage was for £16000 and im not sure over how long.
My mother says they have paid more than what was due on monthly payments to try and clear it a little quicker but today she got a letter to say it is a little over £4000 short to cover the balance of what is owed ? Can she claim against the mortgage company

jont80

Or advisor who gave the advise or recommendation of this mortgage ?

Gorgeous_George

Does she have an Endowmwnt policy? This is a savings vehicle taken out at the same time as an INTEREST ONLY mortgage. The policy was supposed to pay the mortgage off at the end of the term.

If so, she may have a claim if it (the Endowment policy) was mis-sold. She may not. She may be time-barred.

GG

dunstonh

Can she claim against the mortgage company

Having a shortfall is not grounds for complaint. How it was retailed will depend on that.

Over 3/4 of endowments are now time barred from complaint. Your parents had 3 years from first being notified of a high risk of shortfall to make a complaint. For most people that was 2003-4.

Your parents appear to be aware of it and took action so they did what they were meant to do.

jont80

She says she was making payments and was expected to come out with a lump sum payment and her mortgage paid off but instead there is no lump sum and £4300 outstanding.The policy was taking out in 1990 and she has only found out about the shortfall this morning by letter from Standard Life.

jont80

I dont think my mam was aware of it.It seem to come as quiet a suprise when her mortgage was meant to be paid off to find you owe £4300 more.Well she certainly looked surprised !!!
It was I who mentioned it to her after being a member of this site and reading of shortfalling endowments before.

jont80

What it boils down to was the mortgage advsior,Advised this mortgage gaurenteeing it would cover the mortgage and what not with a lump sum.Now maturing time is here it doesnt.
Surely they have been ill advised ?

dunstonh

The policy was taking out in 1990 and she has only found out about the shortfall this morning by letter from Standard Life.

In 1990 that was a fair expectation. No endowment had ever fallen short at that time. Most paid out 2-3 times more than needed. They didnt start falling short until around 2000. From about 2000-2001 onwards your parent's statements would have included a shortfall warning each year and the estimated amount of shortfall.

Surely they have been ill advised ?

Maybe, Maybe not. There is always a risk of shortfall and if they were aware it was possible then it wasnt mis-sold, even if it fell short. If there were not aware then possibly they were mis-sold.

However, Standard Life have now timebarred their endowments so a complaint would be rejected as being out of time.

VIGILANT22

Standard Life first lettered endowment clients in 2003 (approx 1.3 mil ), 75% rcvd a red letter and 13% amber

jont80

Thanks for your replies.

jont80

Going through my mams statments i have a balance of £12,300 in Feb of 2008 but in March 2010 they say it will mature at £11,000. How has the balance decreased in the past 24 months by over a thousand pound considering they have been making monthly payments aswell ?