What Exactly Is A Endowment Shortfall ??

C_Mababejive

I think there are a lot of people with interest only mortgages who do not have a repayment vehicle.

Is it possible to take out an interest only mortgage as a safety net so that whatever happens,you will only have to pay interest. A kind of hedge against bad times..BUT where possible, ie most months..do the mortgage companies allow you to overpay to a level approaching what might have been the payment had it been a repayment mortgage?

Gorgeous_George

jont80 wrote: »

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 ?

... because SL have expensive overheads including offices and shareholders and the money has to come from somewhere.

If you don't want to do the research to make a claim yourself, you could employ a 'no-win, no -fee' claims company to act on your behalf. Nothing to lose.

GG

dunstonh

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 ?

You may have heard about the credit crunch and global recession. Stockmarkets dropped over 40% in that time, Property investments fell by a similar amount and fixed interest securities dropped 10-40%. Even cash lost money (as insurers dont get FSCS protection to any meaningfull level).

If you don't want to do the research to make a claim yourself, you could employ a 'no-win, no -fee' claims company to act on your behalf. Nothing to lose.

If its time barred then thats it. An ambulance chaser isnt going to help.

treliac

jont80 wrote: »

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

It's a great shame for so many that they bought these policies, believing when they were told they would cover the cost of the mortgage when it came due to be paid and would even accrue some extra on top. We were duped ourselves.

What many were not told, though, and didn't understand or realise was that this wasn't some sort of savings account with guaranteed interest but a gamble on the stock market, which could go either up or down.

There may have been warnings along the way but it's clear that there are still people who don't understand their situation and probably didn't realise that warnings applied to them, so convinced were they of what they had bought and what they had been told at the time.

Now, it seems, there are still a fair few who have interest only mortgages and there's a time bomb ticking away for them, which will be unearthed over the next few years, leaving people to find other ways of funding the shortfall, for example extending their mortgages - even if they were hoping to retire, or downsizing, or looking at equity release schemes - though these are generally said to be a poor deal at the moment. Maybe new and better options will emerge once the full extent of the problem becomes clearer.

Gorgeous_George

dunstonh wrote: »

If its time barred then thats it. An ambulance chaser isnt going to help.

Quite. However, it would cost nothing to ask for the ambulance chaser's opinion and by complaining, even when it is time-barred, the complaint will register on a list somewhere. This data is vital if the scale of the problem is to be fully understood. The whole 'time-barred' idea is unfair and should be challenged IMHO.

The saving grace is that many of the shortfalls are quite small when compared to today's house prices but, I accept, that doesn't really help those affected.

GG

dunstonh

It's a great shame for so many that they bought these policies, believing when they were told they would cover the cost of the mortgage when it came due to be paid and would even accrue some extra on top. We were duped ourselves.

For decades they did that.

There may have been warnings along the way but it's clear that there are still people who don't understand their situation and probably didn't realise that warnings applied to them, so convinced were they of what they had bought and what they had been told at the time.

It often happens that people become complacent when risks which exist never occur. Over time the risks get understated.

Now, it seems, there are still a fair few who have interest only mortgages and there's a time bomb ticking away for them

Not really. People have been getting warnings since 20001 about potential shortfalls. Many of those that have the larger likely shortfalls have matured or will do in the next few years. Ironically, those that took out unit linked endowments in the late 90s could actually go back to being in surplus again for much the same reason that caused the earlier ones to fall short.

The whole 'time-barred' idea is unfair and should be challenged IMHO.

I'm in two minds about it.
1 - In law, time bars do exist but in financial services the FSA won't allow it unless they say there is one. So, generally, financial advice firms are less protected under law than other businesses.
2 - If you are going to bring in a time bar then match the legal one.
3 - The time bar in its endowment form came about because of ambulance chasers. Far too many people were putting in complaints who didnt have a valid reason for do so. They were encouraged to lie.

The saving grace is that many of the shortfalls are quite small when compared to today's house prices but, I accept, that doesn't really help those affected.

And typically, the endowment mortgage is £10-£20 cheaper per month on an average mortgage. Over 25 years, a £20pm saving is £6000. So, in that example, a shortfall up to that amount sees no actual loss. Plus, 25 years ago, the £20pm saving was probably more valuable than a £6000 shortfall now. Especially with interest rates having been low for most of the last decade allowing easy overpayments.

Gorgeous_George

dunstonh wrote: »

...Not really. People have been getting warnings since 20001 about potential shortfalls...

Do you often add extra zeroes to your numbers

GG

ILW

Gorgeous_George wrote: »

Do you often add extra zeroes to your numbers

GG

I do, and I have an extremely inpressive 20" member.

dunstonh

Gorgeous_George wrote: »

Do you often add extra zeroes to your numbers

GG

lol to you and ILW.


Back on subject, I had a standard life endowment projections letter through today which listed the endowments on our agency. There were 6 of them. 3 were time barred. One is time barred in November 2010 and two are heading for a surplus and time bar clock hasnt started yet.

So, its possible the plan hasnt time barred. However, if it matures this year in shortfall then I would expect it to be barred